Abu Dhabi, the administrative capital of The United Arab Emirates (the UAE), comprised over 80% percent of the UAE’s territorial land, having a strategic and financial hold in the UAE. It has introduced various flexible laws for transparent and safe businesses in the UAE. It takes less time to form a company in Abu Dhabi as compared to other states. It allows foreign investors to own companies entirely in its free zones and also exempt them from corporate and income tax. There are two jurisdictions in Abu Dhabi to set up a business: mainland jurisdiction and free zone jurisdiction. Both jurisdictions have their own set of laws starting up any business in Abu Dhabi. In this article, we will discuss both mainland and free zones company laws in Abu Dhabi.
Companies created outside the free zones’ jurisdiction are mainland companies having separate laws and procedures for initiating company formation. Numerous businesses can start in Abu Dhabi, such as Limited Liability Companies LLC, Private stock Company, etc. Every company type has its benefits and mode of operations. Although, investors mostly prefer LLC in the mainland when it comes to choosing business types. First of all, to establish a company in the mainland, one should know company types and be aware of the business activity he/she desires to start. There are six types of licenses. They are: industrial, commercial, professional, tourism, agricultural and occupational.
Along with the selection of business types, the investor shall have enough resources to run a business. After finalizing the business type, investors can start a business registration process because there are various licensing authorities for every business type. An investor is supposed to approach the relevant authority such as for clinics, real estate, transportation, etc. you have to approach the Abu Dhabi Department of Economic Development (DED), Abu Dhabi Cultural Authority (TCA) deals with the setting up of travel agency business, hotels, rental boat business, etc. and there is a long list of competent authorities govern different trade types in their scope.
After deciding the business type and its activity, the next step is the selection of a unique trade name for your company to register for; if the trade name is not in the list of the registered company name, then the authority approves the name of the company and issues a certificate for that trade name. This is the first step towards the procedure of setting up a company. After receiving this certificate, the investor initiates the process for registration of the company and business license by approaching the relevant authority. For the foreigner, it is compulsory to get approval from the General Directorate of Residency and Foreigners Affairs (GDRFA) for setting up any business. The investor can rent a site for his business activity. He can visit the Commercial Protection Division at DED to get their approval for the selected site’s feasibility for his business activity. After getting the initial approval, the investor needs to visit the relevant authority to get approval and complete all the legal requirements to set up his company. The DED has collaborated with other authorities to obtain business approval. Investors can get approval from their relevant authorities after filing all the fees required to be submitted for this process.
In some businesses, additional approval is required from the Ministry of Interior, Ministry of Economy, etc., after completing all the steps of company registration and payment of fees and charges within 30 days, if failed to pay the application for registration of the company will be canceled by the authority, investors can collect his business license from the economic department (DED) or can get online through their websites. It is a prerequisite for companies in Abu Dhabi to get membership of the Abu Dhabi Chamber of Commerce and Industry.
In Abu Dhabi, there are multiple free zones, providing investors a favorable and investment-friendly environment to establish a business without any fear and loss. Instead, investors are bestowed with various benefits like 100% ownership of companies, exempted from income tax, corporate tax, import and export duty, 100% free transfer of funds, and many more facilities and benefits investors acquire from establishing a company in the free zones. The central international free zone in Abu Dhabi is the Abu Dhabi Global Market (ADGM). It provides domestic and international investors an efficient business environment.
The ADGM has its separate jurisdiction and authorities, including three leading authorities: Registration Authorities, Financial Service Regulatory Authority (FSRA), and ADGM Courts, to smoothly and flawlessly regulate business affairs. The registration authorities are the first stop regarding company formation matters; they help and guide investors about the registration and licensing procedures. The FSRA is responsible for regulating the financial market by maintaining transparency and engagement in the market. The ADGM courts have absolute jurisdiction to deal with all civil and commercial disputes arising in the jurisdiction of the ADGM. It has its own laws and regulations to govern all matters on the premises of the ADGM. Fundamentally, there are four types of entities investors can establish in the ADGM.
i. Company Limited by Shares
ii. Branch of a Foreign Company
iii. Partnership Firm
iv. Company Limited by Guarantee
Companies form under Companies Regulations 2020 in ADGM free zone. A formal application (containing name of the company, defined shares, type of company, whether it is public or private company & other particulars of the company) is required to be put forth to the registrar for the registration of any company in the ADGM. If the company has a share capital, it is necessary to submit a statement of capital and initial shareholdings for registration. For the companies limited by guarantee, a Statement of Guarantee is required and other requisites for companies with their particular nature, copy of lease agreement for the site rented for business activity, etc. Once the authorities approve the business application, the investor is required to fill an online incorporation/registration form and submit all the relevant documents mentioned in the online form. However, a paper-based form is also accepted by the ADGM, but it costs some extra fees. After submitting the registration form and payment of all fees and dues, the investor will be issued with the commercial license within a week. An establishment card is mandatory for the new companies in the ADGM for all visas related matters.