Setting Up a Company in the UAE
Mainland, free zone or offshore — how the three routes differ, who can own 100%, and what the process actually involves in 2026.
The UAE remains one of the most efficient places in the world to incorporate — but the right structure depends entirely on what you intend to do and where you intend to sell. There are three distinct routes: mainland, free zone and offshore. Choosing wrongly is the most common and most expensive mistake foreign founders make.
The three routes at a glance
| Route | Licensed by | Foreign ownership | Where you can trade |
|---|---|---|---|
| Mainland | Emirate's Department of Economic Development (DED) | 100% for most activities | Anywhere in the UAE + abroad; government contracts |
| Free Zone | The relevant free zone authority (45+ zones) | 100%, always | Within the zone & internationally; onshore UAE sales need a distributor or mainland branch |
| Offshore | Offshore registrar (e.g. RAK ICC, JAFZA Offshore) | 100% | International only — no onshore UAE trading |
Mainland
A mainland company is licensed by the emirate's Department of Economic Development (the DED, or in Dubai the Department of Economy & Tourism). It can trade directly across the whole UAE market, bid for government contracts and open offices anywhere. Following reforms to the Commercial Companies Law — Federal Decree-Law No. 32 of 2021, as amended by Federal Decree-Law No. 20 of 2025 — foreign investors can own 100% of a mainland LLC across most commercial, professional and industrial activities. A limited list of activities of strategic importance can still require a UAE-national partner or local service agent, so the activity should always be confirmed with the relevant DED before applying. Mainland companies typically need a physical office registered through Ejari and are subject to audit requirements.
Free zone
The UAE has more than 45 free zones, each with its own registrar and rulebook, often clustered around an industry — technology, media, finance, logistics, commodities. Free zones have always allowed 100% foreign ownership and offer fast, package-based setup. The trade-off is scope: a free-zone licence is activity-specific and zone-bound, and a free-zone company generally cannot sell directly into the UAE mainland market without appointing a distributor or establishing a mainland branch. The two common entity types are the FZE (Free Zone Establishment, single shareholder) and the FZCO / FZC (multiple shareholders).
Offshore
Offshore companies — formed through registrars such as RAK ICC or JAFZA Offshore — are built for holding assets, international structuring and asset protection. They carry no onshore UAE trading rights and do not provide UAE residence visas, but they are inexpensive and flexible, and are often used as a holding layer above a mainland or free-zone operating company rather than as a standalone trading vehicle.
Licence types and entity structures
Across all routes, the activity drives the licence category — typically commercial (trading), professional (services), industrial (manufacturing) or tourism. Common legal forms include the LLC (the standard mainland vehicle), sole establishment, civil company, branch of a foreign company, and the free-zone FZE/FZCO. The Memorandum of Association sets out shareholding, capital and governance.
The setup process
- Define the business activity precisely — it determines the licence, the approvals and the visa quota.
- Choose the jurisdiction (mainland / free zone / offshore) and legal form.
- Reserve the trade name and obtain initial approval.
- Secure premises (Ejari tenancy for mainland; flexi-desk or office in a free zone) and draft the MoA.
- Obtain any sector approvals, then the trade licence and Chamber of Commerce registration.
- Open a corporate bank account, then process establishment cards and residence visas.
Note that incorporation is only the start: most companies also need to consider corporate tax registration, VAT, Economic Substance, Ultimate Beneficial Owner filings and (where relevant) the free-zone Qualifying Free Zone Person conditions. See our UAE Corporate Tax & VAT guide.
Frequently asked questions
Can a foreigner own 100% of a UAE company?
Yes for most activities — 100% foreign ownership applies to free zones always, and to mainland LLCs across most commercial, professional and industrial activities under the amended Commercial Companies Law. A small number of strategic activities still require a UAE partner.
What is the difference between mainland and free zone?
A mainland company can trade anywhere in the UAE and bid for government work; a free-zone company has 100% ownership and fast setup but generally needs a distributor or mainland branch to sell onshore.
Does an offshore company give residence visas?
No. Offshore companies are for holding and international business and do not provide UAE residence visas or onshore trading rights.
What is an FZE versus an FZCO?
An FZE is a free-zone entity with a single shareholder; an FZCO (or FZC) has multiple shareholders.
Official sources
- UAE Government Portal — Starting a Business
- Dubai Department of Economy & Tourism (DED)
- Commercial Companies Law — Federal Decree-Law No. 32 of 2021, as amended by Federal Decree-Law No. 20 of 2025
- RAK International Corporate Centre (RAK ICC) — offshore
This guide is general information prepared by ARM Management and is current as at June 2026. It is not legal advice; activity eligibility, ownership rules and procedures vary by emirate and free zone and change over time. Confirm with the relevant authority or an advisor before incorporating.
Structure your UAE entity correctly the first time.
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