Do you want to set up your business in Dubai but are not sure which kind of business you should choose? Don’t worry! We have got you covered. When we talk about types of business entities in Dubai, the only thing that comes to mind is the global business hub.
In this comprehensive blog, we’ll discuss different types of business formation that can open the door to success for you. So, without any further delay, let’s dive into this guide and learn about how you can set up different businesses in Dubai.
Overview of Different Business Formation
Here is a detailed discussion about different types of business formation:
Public Shareholding Company (PJSC)
A Public Shareholding Company (PJSC) is a public joint-stock company. It is a type of business that allows for a broad base of ownership by shareholders. This structure is primarily organized for large corporations, looking to raise capital by offering shares to the public, often through share exchanges.
A PJSC is ideal for large-scale projects in the banking, insurance, and finance sectors. The main characteristics include requiring at least 10 shareholders, allowing the company to trade publicly, and being an ideal corporation planning to scale up by raising public funds.
Also, a minimum of 30% of the company’s shares must be offered for public subscription. Choosing a PJSC is ideal for those aiming to form a massive publicly traded business in Dubai. This company setup provides an approach to important capital and allows for multiple investors to increase on a large scale. However, it comes with higher scrutiny and regulatory oversight due to its public status.
Off Shore Company
An offshore company in Dubai is a new business entity established in a foreign jurisdiction that primarily operates outside the UAE. It is an attractive option for international entrepreneurs due to its flexibility, separate entity, and significant financial benefits. Offshore companies are often used for purposes like holding assets, managing wealth, conducting international trade, or offering professional services globally.
The key advantages include 100% foreign ownership, and an income tax returns free environment with no corporate or federal income tax. Offshore companies are not required to have a physical office in Dubai and don’t face stringent auditing requirements, making their setup, and maintenance relatively easy related to business decisions.
One of the most popular zones for offshore company formation is the Jebel Ali Free Zone Authority (JAFZA), known for its robust legal framework and strategic location near major shipping routes. Offshore companies in Dubai enjoy confidentiality as the ownership details are not publicly disclosed providing an extra layer of privacy for asset protection.
Civil Company
A Civil Company is an entity specifically designed for professionals such as doctors, engineers, lawyers, or consultants who want to establish a practice in Dubai.
This type of business is focused on offering professional services, and the owners (partners) have full control of the company.
Civil companies have some important characteristics, which include allowing full foreign ownership, though a local service agent is required for administrative purposes. it is best fit for any profession in fields like law, police, accountant healthcare, and tech.
A Civil Company is perfect for business owners who want to independently manage their business in Dubai without needing a local partner giving them full control of operations.
However, the downside is personal liability for debts of the business.
Joint Venture Company
A joint venture company in Dubai allows two or more four main types of parties to form a partnership, typically with one party being a UAE national and the other a foreign investor or general partner.
This legal structure is not a separate legal entity but rather an agreement between partners for a specific project or business activity.
The key features include the agreement between a local Emirati and a foreign entity and individual, with no need for official registration or business license with Dubai governments. However, profit and loss sharing will take place according to agreement.
A Joint Venture is a great choice for those looking to partner with a local Emirati to expand their business operations in Dubai. It offers flexibility in profit-sharing and effective operational control, and manages personal assets, based on mutual agreement. It makes this business an ideal way to tap into the local market with minimized risk.
Free Zone Company
Forming a free zone company in Dubai is an attractive option for entrepreneurs and businesses seeking 100% foreign ownership, tax benefits, business profits, unlimited liability, and simplified regulations. Dubai’s free zones are designated areas that cater to specific industries, offering a host of incentives to attract international investment with consultation with an attorney.
The primary advantage of setting up a free zone company is that it allows full ownership by foreign nationals, without the need for a local sponsor, or two, or more people (limited partners). Additionally, free zone companies benefit from zero corporate income and losses, full repatriation of profits and capital, and exemption from import and export duties.
This makes it an ideal choice for businesses focused on international trade, services, or manufacturing and offers more flexibility. The process of forming a free zone company is straightforward. First, you select the relevant free zone based on your business activity, such as the Dubai Multi Commodities Centre (DMCC) for trading or Dubai Silicon Oasis (DSO) for tech startups.
After choosing a trade name and applying for the appropriate license, the company is officially registered. Most free zones also provide flexible office solutions, such as virtual offices or shared workspaces like a corporation.
Private Shareholding Company
A private shareholding company is similar to a public shareholding company, but its share is privately held and not offered to the public, whether it is personal income or losses.
This business organization is suitable for investors or a group of individuals looking to raise capital privately rather than through a public stock exchange.
The main key features of the private shareholding company include requiring a limited partnership, privately owned shares not publicly traded, and being ideal for medium to large businesses looking to grow without going public. They can able to take advantage of profits or losses without sharing them with the public.
A Private Shareholding Company is a perfect choice for those wanting to raise substantial capital while keeping ownership within a smaller group of investors, providing more control over operations compared to a public shareholding company.
Limited Liability Companies (LLCs)
A Limited Liability Company (LLC) is one of the most popular and flexible different types of business entity in Dubai. It protects the owners by limiting their liability for business debts to the amount of their investment in the company. However, a UAE national must hold at least 51% of the shares.
You can get different benefits from limited liability, which includes a minimum of two and a maximum of 50 shareholders, , and limited liability partnerships to their share in the capital.
An LLC is an excellent choice for those seeking an easy, and inexpensive as it allows for a wide range of commercial activities and the opportunity to trade both locally and internationally.
While partnering with a UAE national is required, different types of partnerships and corporations are beneficial for conducting business in Dubai’s thriving market.
Sole Proprietorships
A sole proprietor is the simplest form of every business setup in Dubai, where a single individual owns and operates the business. The owner has complete control but also bears all the risks, as they are personally liable for any debts incurred by the company.
Key features include full control over personal assets. The Personal asset may used for business with minimal regulations and the owner is personally liable for any taxation, debts, or legal issues.
This structure is suitable for small business owners or freelance professionals such as consultants and artists. A Sole Proprietorship has its own advantages and disadvantages but it is perfect for those looking to run a small business or freelance with full control and fewer regulations in which a lawyer can help, though the owner must be aware of the personal assets can be used or the risk associated with liability.
Branch of a Foreign Company
A Branch of a Foreign Company is an option for international companies looking to expand their operations to Dubai without setting up a new legal entity. The business structure operates under the name of the parent company and can conduct business similar to that of the parent company.
The main features include the requirement of a local service agent, who holds no ownership in the company, and the branch being legally dependent on the parent company. All liabilities and obligations are tied to the parent company in which attorneys can provide their consultancy.
The Final Words
When it comes to setting up your business in Dubai, there are different types of business formation options. The best business formation for you depends on factors like the nature of your business, your growth plans, your general partnership plan, and your comfort with local regulations.
Whether you’re a solo entrepreneur or a large c corporation, Dubai offers a structure that can help you own and run a successful business. Take your time, get in touch with Xpert Advisory’s legal experts, and choose the formation that aligns with your vision and goals.
Frequently Asked Questions
- Which business is growing fast in Dubai?
Tech startups, e-commerce, tourism, and real estate are rapidly growing industries in Dubai due to digital transformation, tourism recovery, and ongoing infrastructure development.
- Which business is best to start for beginners?
For beginners, e-commerce, freelance services, and social media marketing are great options due to low startup costs, flexibility, and the rising demand for online businesses.
- Which business I can start from zero?
You can start a freelance service or content creation business from zero, leveraging skills like writing, graphic design, or digital marketing with minimal initial investment and online platforms.
