Starting a business in free zone UAE

Setting up a business in a free zone is relatively easier. Free zone authorities require minimum paperwork and duration. Here are the key steps to set up a business in a free zone.

• Determine the type of legal entity
• Choose a trade name
• Apply for a business licence
• Choose an office space
• Get pre-approvals, register your business and get your licence

Determine the type of legal entity

In a free zone, you can set up one of the two types of companies:

• Free Zone Limited Liability Company (FZ LLC) or Free Zone Company (FZ Co.)
• Free Zone Establishment (FZE)

The differences lie in the number of shareholders and whether the shareholder is a natural person or a legal person. All free zones might not register both types of companies. You need to check with individual free zone authorities about the type of company they can register. Refer to the list of free zones and their authorities.

Capital requirement

There is no minimum capital requirement at?twofour54 Abu Dhabi.

In?KIZAD, you can form an LLC for which the minimum paid-up capital should be AED 150,000.

In?Dubai Airport Free Zone, you can form an FZ Co. with a minimum share capital of AED 1000. Each share should be in the denomination of AED 1000.

In?DMCC, the minimum share capital for forming a free zone company is AED 50,000 per company and AED 10,000 per shareholder. For a company to be issued a General Trading Licence, it should have a minimum of AED 1 million share capital.

In?Hamriya Free Zone, you can form an FZE with a share capital of AED 150,000.

Choose a trade name

While you are deciding upon the type of legal entity your business should take, you should choose a trade name.

In most cases, you should check either with the respective free zone authority or the respective with the Department of Economic Development about the permitted trade names and whether the intended name has already been registered.

As per?the website of twofour54, you cannot use 'Abu Dhabi' and/or 'United Arab Emirates' in the name of the FZ-LLC or the branch.

Refer to DMCC's?list of restricted trade names.

Apply for a business licence

The type of business licence you will apply for depends on the primary activity of your business.

Choose an office space

You can either buy or lease office spaces in free zones. Office requirements depend on the number of employees and type of business activity of your company.

In DMCC, you can choose from a flexi desk of 20-30 sq. m., a flexi office of 200-265 sq. m., or offices running through multiple floors totalling up to 2,000 sq. m. each.

In?Dubai Airport Free Zone, you can?choose?between 'Office Packages', 'Smart Desk Office Packages' and 'Executive Office Packages'.

Hamriyah Free Zone Authority provides over 100 executive offices suits ranging in size from 15 m2 to 42 m2 with conferencing and internet facilities.

Get pre-approvals, register your business and get your licence

Companies established in free zones are governed by the rules of the respective free zones. To get the necessary approvals, you need to apply with the documents. The list of documents varies on the type of business activity, the type of company and the requirements of the free zone authority. Below is a general guideline of steps and documents needed for approvals.

A. Initial approval

First, you need the initial approval. You are required to provide:

• Completed application form
• Business plan
• Copy of existing trade licence/registration certificate (if you are an existing company, applicable for local company only)
• Coloured passport copies of the company's shareholder/s and the appointed Manager/Director for the new company
• Specimen signature of the company's shareholder/s and the appointed Manager/Director for the new company
• 2 years' audited financial reports for corporate entity or certificate of reference from a personal bank of the individual shareholder
• NOC from current sponsor (for individuals)
• Unit title deed
• Letter of Intent
• Registry Identification Code Form (RIC) for Manager/Director (Original and notarised)

Freelancers need to submit fewer documents. In most cases, they need to submit:

• Application for registration
• CV
• Bank reference letter
• Registry Identification Code Form (RIC) (Original and notarised)

B. Registration

After getting initial approval, you need to pay registration fees and licence fees. The fees depend on the type of licence required. Then, you need to submit:

• Completed application for registration
• Board Resolution appointing Manager/Director (Notarised and attested)
• Power of Attorney given to Manager/Director (Notarised and attested)
• Memorandum and Articles of Association (Notarised and attested)
• Specimen signature of Manager/Director (Notarised and attested)
• Passport-size photo of Manager/Director against white background
• Share capital information

C. Licensing and visa process

• Lease agreements will be prepared by the authority
• Then trade licence will be issued
• Visa processing will start

Note that certain activities may be subject to approval from external authorities. Refer to special cases.

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