Mainland Company restricts the ownership of foreign investor to a maximum of 49% and it requires a local sponsor with ownership of 51%. The local sponsor will be a UAE national, whereas free zone establishment grants complete business ownership to foreign investors. Entrepreneur has 100% ownership and control of his business operations.
Scope of business:
Companies that are entrenched in mainland United Arab Emirates faces no limits related to scope of business. Business can operate anywhere in Dubai, i.e. in free zones and even outside Dubai. They can take up commercial, professional and even industrial activities apart from banking and insurance.
Compared to mainland setup, a free zone company can only operate within the area designated to free zone. If they wish to conduct business in local market then they will require local distributor or an agent for assistance. The free zones are based mostly near seaports and airports. So the most favored business for these setups are import and export related services.
For Mainland Company, there is minimum requirement of 200 sq. ft. to be leased out annually. After that, the company will be issued a license by DED. On the other hand, there is no requirement for a physical workplace for free zone companies. They may or may not have physical offices depending upon their work requirement. There is a special service for entrepreneurs in free zone areas which is called “plug in and go” through which licensees can use common business center desks for minimum of 5 hours per week. This measure gives the security to the new market entrants to save on initial costs of registration. This facility is also known as “flexi desks”.
Time Frame to Set Up Business:
For Mainland, the time frame for its setup depends upon finding the right local partner as sponsor and for free zone companies it depends upon choosing the right free zone for business operations. Usually it takes between 3 to 6 weeks for both mainland and free zone setups.
There is no no visa limitation for a mainland license. An electronic portion is circulated by the Ministry of Labour to each mainland company. It shows their ability for visas acquisition and if the company needs more staff then it can also enhanced. Visa eligibility depends on the office space, that being said if you have more office space then you can apply for multiple visas for your company. Driver and sales staff for outdoor assignments are not eligible for visa facility.
Each free zone license are offered 2 visas on the package of smart office and varies as different free zones in UAE permits 3-6 visas on this package. If you require more visas then requirement to lease out a physical office or a warehouse can get a number of visas.
Approval from government authorities
In order to obtain license, Mainland Company requires approval from DED (Department of Economic Development), DM (Dubai Municipality), and Ministry of Labor (MOL), Department for Naturalization and Residency affairs of Ministry of interiors or Immigration (MOI). Also for specific business activities e.g. for medical related activities, further approval is required from Dubai health authority (DHA). Free zone companies usually do not require approval from external authorities unless there is some extra special activity which requires approval.