Difference Between Mainland And Free Zone In UAE

Entrepreneurs around the world have different motives and priorities. A good business-friendly jurisdiction provides wide-range business opportunities for entrepreneurs with different choices. An important reason for which UAE is known as a business hub is the presence of various types of business opportunities for people with different priorities. Two main business jurisdictions that provide two different types of business opportunities in UAE are mainland and free zones.

There are pros and cons of both these jurisdictions and business opportunities in both these areas are intended for different types of entrepreneurs. Following are main points that differentiate between a mainland company and a company located in any of the free zones in UAE.

Ownership:

It is the main and most critical difference between mainland and free zone company. If an expat establishes a company in mainland UAE, then he/she can only acquire 49% shares of the company and the remaining 51% shares will be given to a local Emirati citizen. Only in case of a professional license, an expat can own 100% shares. But even in this case, he/she has to appoint a local service agent.

These types of restrictions are not applied in free zones. An expat can hold 100% shares of his/her free zone company. Neither any local partner nor service agent is required. This is the best advantage for free zone company in UAE.

Business Scope:

There is no restriction for a company present in mainland UAE as far as scope of business is concerned. It is free to do business in any part of UAE. These companies are also allowed to do business inside any free zone present in any of the emirate of UAE.

On the other hand, free zone companies are usually only allowed to do business (manufacturing, selling etc.) within the area designated for any specific free zone. These free zones are mostly located near seaports or airports and the businesses most favorable for such jurisdictions are import and re-export.

Office space:

Minimum 200 sq ft office space is mandatory for any company in mainland UAE. There is no such requirement for a free zone company. Such companies can work without physical offices.

Government Authorities for Approval:

Standard government approvals are required for a mainland company according to the type of business. DED (Department of Economic Development), Ministry of Labor (MoL), Ministry of Interior (MoI), Dubai Municipality (DM) are few such departments that will be required for approval of company registration in mainland UAE.

On most of the occasions, the specific free zones have their own rules for approval of any company inside its jurisdiction and they don’t require approvals from authorities outside of the free zone.

These are major differences between companies incorporated in mainland and freezones in UAE. It clearly indicates that both jurisdictions have their own advantages and negative points and these jurisdictions are appropriate for different types of business structures. Whether you want to establish a company in free zone or mainland UAE, you can contact Riz & Mona Consultancy at WhatsApp # 971-56-9971225 for easy and fast approval of company formation process.