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5 Easy Steps to Start a Company in Dubai Free Zone

Prabhat Nigam

| Updated: May 10, 2022 | Category: Company Registration

5 Easy Steps to Start a Company in Dubai Free Zone

Dubai has been one of the most attractive business destinations for new businesses because of the ease of doing business and initiating business it offers to foreign and local investors. This article lists down the 5 easy steps to incorporate a company or start a company in Dubai Free Zone.

What is a Free zone company in Dubai?  

A free zone company in Dubai is an entity situated in an area called free zone which is a special economic zone where an investor can have a special tax free status and trade conditions are such that any investor can easily start his business. There is 100 percent ownership of the investor and there are no restrictions of a sponsor or an agent etc.

What are the 5 steps to start a company in Dubai Free zone?  

Dubai has made it quite easy to start a company in the Dubai free zone because of the minimum paperwork and duration. Following are 5 easy steps to start a company in Dubai free zone:

  1. Decide the type of legal entity: The first step in starting a company in Dubai free zone involves deciding on the type or legal structure of the business entity. A business entity in Dubai free zone can take up the form of the following two types of companies:
  2. Free Zone Company[1] (FZ Co.) or Free Zone Limited Liability Company (FZ LLC)
  3. Free Zone Establishment (FZE)

The difference between the above two kinds of companies depends on the number of shareholders and the whether such shareholder is a natural or a legal person. There is a possibility that all free zones may not register both types of companies. It depends on one free zone to free zone.

Many of the existing local and foreign companies set up branches of their companies in these free zones.

  • Selecting a trade name: Along with deciding the type of business entity, the promoters also need to decide on the trade name with which they want to carry their business. It is advisable that the promoters should check with the concerned free zone authority or from the Dept. of Economic Development whether the chosen name is permitted according to the law of the land or the chosen name has already been taken by someone else or not.

According to the Dept. of Economic Development, the following things must be kept in mind before choosing a trade name. The chosen name:

  • must not violate public moral or disturb the public order of the country
  • must be in accordance with the legal form of the company
  • must not be previously registered
  • must be compatible with the required kind of activity and its legal status
  • must neither contain the names of any religion, or the governing authority nor the names or logos of any external bodies  
  • Apply for a business license: The third step is to apply for a business license depending on the kind of business the promoters wish to undertake in the free zone. Different free zones are centred on promoting a business activity and accordingly a promoter can set up a business in any of such free zones. Business can be initiated in the fields of financial, educations, retail, hospitality, media etc.
  • Choosing office space for the business: The promoters have been given an option to buy or lease the office premises in free zones. The office premises depend on the kind of business activity the company wishes to undertake and the number of employees it wants to keep on its payroll before they start their business. Office premises range from as low as a flexi desk of 20-30 sq. m. to an office space running in multiple floors up to 2000 sq. m. each.  
  • Obtaining pre-approvals, registration of business and obtaining of license: Any business established in a free zone is governed by the rules of their respective free zones. To obtain the necessary approvals, the promoters need to apply with the required documents. The list of documents depends on the kind of the business the promoters wish to undertake, the structure of the business entity, and the respective requirements of the free zone authority. The following list is an indicative list of the documents and the steps a promoter need to submit and follow respectively:
  1. Initial approval: in order to obtain the initial approvals, following documents need to be submitted with the authority:
  2. Completed application form
  3. Business plan
  4. A copy of the business license or registration certificate in case of an existing company (it is applicable in case of a local company only)
  5. Coloured copies of the passports of the company’s shareholders and the appointed Director/ Manager of the new company
  6. Specimen signature of the company’s shareholders and the appointed Director/ Manager of the new company
  7. Audited financial reports of the past two years of the corporate entity or a certificate of reference from a personal bank of the individual shareholder
  8. No objection certificate from the current sponsor (in case of individuals)
  9. Letter of Intent (LoI)
  10. Unit Title Deed
  11. Registry Identification Code Form (RIC) for Director/ Manager (Original and notarised)

In case of a freelancer, fewer documents need to be submitted such as:

  • Registration Application
  • CV
  • Reference Letter from Bank
  • Registry Identification Code Form (RIC) (Original and notarised)
  • Registration:  Once the promoter gets the initial approvals from the authority, then it needs to pay the registration fee along with the license fee. The license fee shall be determined on the basis of the business activity sought to be undertaken by the promoter. Then the for the purpose of registration, following documents need to be submitted:
  • Completed application for registration
  • Board Resolution appointing the Manager/ Director (Notarised and attested)
  • Power of attorney (PoA) given to the Manager/ Director (Notarised and attested)
  • MoA and AoA Board (Notarised and attested)
  • Specimen signature of Manager/ Director (Notarised and attested)
  • Passport size photograph of Manager/ Director (Notarised and attested)
  • Information on share capital
  • Licensing and visa process:
  • Lease agreement prepared from authority’ end
  • Trade license is issued
  • Commencement of visa processing

It must be noted that for exceptional cases, approval from external authorities shall be required.  

Conclusion 

The reason for starting a company in Dubai free zone is so attractive because of the tax exemptions enjoyed by the companies, easy re-exporting prowess, stable economy and the ease of doing business which it offers to the new businesses.

Read Our Article: Procedure for Company Formation in Dubai

Prabhat Nigam

Prabhat has done his BA LLB (Hons) and has been writing research papers since his law school days. His interest in content writing made him pursue a career in legal research and content writing. His core areas of interest are indirect taxes, finance and real estate.

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