TRW & Co · Corporate & Commercial
Company Formation in the UAE
Company formation in the UAE means choosing between mainland, free zone, DIFC, ADGM and offshore routes, each with its own regulator, legal system, tax profile and market access. Reforms in 2025 and 2026 have widened the options, but the right structure still starts with where your customers, investors and assets will be.
Key pointMany successful groups do not pick one route: they place shareholders in a common-law DIFC or ADGM holding company and operations in a mainland or free zone entity matched to their customers.
At a glance
Five main routes
Mainland, free zone, DIFC, ADGM and offshore companies, plus branches, each have their own licensing body, legal system, market access and dispute forum.
Ownership largely open
Most mainland activities allow 100% foreign ownership since the 2021 reforms, with strategic-impact activities under Cabinet Resolution No. 55 of 2021 still controlled.
New flexibility from 2025
Federal Decree-Law No. 20 of 2025 added LLC share classes, constitutional drag and tag rights, and a route to move registration between emirates and free zones.
Tax applies everywhere
Every company registers for corporate tax; free zone entities reach 0% only as Qualifying Free Zone Persons meeting all substance and income conditions.
Common-law holding layer
DIFC and ADGM vehicles, including Prescribed Companies and SPVs, are widely used to hold UAE and regional operating companies under common-law rules and courts.
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Company formation in the UAE: the five routes
Company formation in the UAE is not one process but five. A business can be licensed on the mainland by an emirate's economic department, incorporated in one of the many free zones, established in one of the two financial centres (the DIFC in Dubai or ADGM in Abu Dhabi), registered as an offshore company, or set up as a branch of an existing foreign or UAE company. Each route has its own legal system, registry, licensing rules, tax profile and dispute forum.
The choice shapes almost everything that follows: which customers the company can serve, how many visas it can sponsor, whether it can benefit from the free zone corporate tax regime, how investors can enter and exit, which court hears a shareholder dispute, and how hard it will be to restructure. Groups often use more than one route, for example a DIFC or ADGM holding company above a mainland operating company and a free zone trading entity.
This guide gives the map. Our detailed pages cover mainland company structures, free zone company formation and the wider rules on foreign direct investment in the UAE.
The legal framework behind each route
Three layers of law interact. Federal law sets the baseline: the Commercial Companies Law (Federal Decree-Law No. 32 of 2021, amended by Federal Decree-Law No. 20 of 2025), the Commercial Register law (Federal Decree-Law No. 37 of 2021), the Corporate Tax Law (Federal Decree-Law No. 47 of 2022), anti-money laundering legislation and the beneficial ownership rules in Cabinet Decision No. 109 of 2023. The Ministry of Economy and Tourism publishes the company legislation.
Emirate law and authorities come next. Each emirate licenses mainland businesses through its own body: the Department of Economy and Tourism in Dubai, the Abu Dhabi Registration and Licensing Authority in Abu Dhabi, and economic development departments in the northern emirates. Each free zone has its own authority and company regulations, created under federal or emirate decrees.
The financial centres form a third layer. Federal Law No. 8 of 2004 allows the DIFC and ADGM to make their own civil and commercial laws. The DIFC Companies Law (DIFC Law No. 5 of 2018) and the ADGM Companies Regulations 2020 are modelled on common-law company statutes, and the DIFC Courts and ADGM Courts hear disputes in English.
Changes in 2025 and 2026
Recent reforms matter for anyone planning company formation in the UAE now. The 2025 amendments to the Commercial Companies Law allow share classes in mainland LLCs, recognise drag-along and tag-along rights in constitutions, create a route for companies to move registration between emirates and free zones, and confirm that free zone companies operating onshore are subject to the federal law for those activities.
Dubai's Executive Council Resolution No. 11 of 2025 lets Dubai free zone companies obtain permission to operate on the Dubai mainland. A new Civil Transactions Law, Federal Decree-Law No. 25 of 2025, has applied since 1 June 2026, and in July 2026 the DIFC widened eligibility for its Prescribed Company regime.
Comparing the routes
The table summarises the trade-offs. It is a starting point; the right answer depends on the activity, customers and investors.
| Route | Licensing body | Market access | Legal system and courts | Best suited to |
|---|---|---|---|---|
| Mainland company or branch | Emirate economic department (DET, ADRA and others) | Whole emirate; branches for other emirates; government contracts | Federal and emirate law; onshore courts | Businesses selling to UAE customers or government |
| Free zone company or branch | Free zone authority | Within the zone and abroad; mainland via distributor, branch or permit | Zone regulations plus federal law; usually onshore courts | Trading, logistics, regional hubs and qualifying free zone businesses |
| DIFC entity | DIFC Registrar of Companies (DFSA for financial services) | Financial and professional services; holding structures | DIFC laws; DIFC Courts | Financial services, funds, family and holding structures |
| ADGM entity | ADGM Registration Authority (FSRA for financial services) | Financial and professional services; holding structures | ADGM regulations and English common law; ADGM Courts | Financial services, SPVs, family offices and holding structures |
| Offshore company | Offshore registry (for example RAK ICC or JAFZA offshore) | No trading in the UAE; holds assets and shares | Registry regulations; courts depend on the registry | Asset-holding and ownership structures with limited activity |
Mainland and free zone companies
Mainland companies
Mainland companies are the default for businesses whose customers are in the UAE. Since the 2021 reforms, most activities allow 100% foreign ownership, as the UAE government's business portal explains, though activities with strategic impact under Cabinet Resolution No. 55 of 2021 remain controlled. The usual vehicle is a limited liability company, with branches of foreign companies, sole establishments, civil companies and joint stock companies as alternatives.
Mainland entities need premises suited to their activity, pay corporate tax at the standard rates and can bid for government contracts and open branches in other emirates. Our page on mainland company setup in Dubai covers the DET process, legal forms and common mistakes.
Free zone companies
Free zones offer full foreign ownership, their own registries and visa services, customs and logistics advantages, and access to the 0% corporate tax rate for Qualifying Free Zone Persons that meet every condition. Most offer a single-shareholder Free Zone Establishment, a multi-shareholder Free Zone Company and branches. Large zones such as JAFZA and DMCC sit alongside sector-specialist zones for media, technology, healthcare and manufacturing.
The trade-off is market access: a free zone company cannot simply trade with mainland customers, and mainland revenue can undermine the 0% rate. Our guide to free zone company setup explains how to choose a zone and structure onshore sales.
The DIFC and ADGM
The DIFC and ADGM are often chosen even by businesses that are not regulated financial firms, because they offer English-language common-law systems, sophisticated company law, independent courts and registries that investors and lenders recognise. They are the usual location for regional holding companies, family structures, fund vehicles and joint venture companies where the shareholders want detailed articles and predictable enforcement.
SPVs and holding vehicles
Both centres offer light-touch special purpose and holding vehicles. In the DIFC, the Prescribed Company regime was amended in July 2026 to open eligibility to any applicant, while most Prescribed Companies must now appoint a licensed corporate service provider. ADGM's special purpose vehicle regime has historically required an appropriate connection to ADGM, the UAE or the GCC; 2026 practitioner updates conflict on whether that requirement still applies, so confirm it before relying on either view. ADGM also offers a restricted scope company that keeps certain information off the public register.
Check the current requirements with the DIFC Registrar of Companies and the ADGM Registration Authority; our articles on setting up in the DIFC and setting up in ADGM go further.
Put the shareholders where the law is predictable, and put the operations where the customers are.
Offshore companies and branches
Offshore companies, such as those registered with the RAK International Corporate Centre or as JAFZA offshore companies, are non-trading vehicles used to hold shares, real estate in permitted areas, intellectual property or other assets. They generally cannot carry on business in the UAE, lease operational premises or sponsor employment visas, and they act through a registered agent. They can be useful in succession and asset-holding structures, but they are not a substitute for an operating licence, and banks increasingly expect a clear rationale and substance.
A branch is the quickest way for an existing company to establish a presence without creating a new legal person. Foreign companies can register branches on the mainland or in most free zones; UAE and free zone companies can open branches in other emirates. The parent remains fully liable, and its documents must be legalised for the registration. For many groups, a subsidiary is preferable once the business is established.
Matching the route to common business models
A few patterns recur. A regional trading business that imports into Jebel Ali and re-exports across the GCC and Africa usually starts with a port-linked free zone company, adding a mainland entity or distributor once local sales grow. A professional services firm with UAE clients typically needs a mainland licence, because its customers and contracts are onshore. A technology start-up planning venture rounds often incorporates a DIFC or ADGM holding company and licenses its operations in a technology free zone or on the mainland.
Family groups and investors holding UAE property, shares and intellectual property often combine a DIFC or ADGM foundation or holding company with operating subsidiaries, sometimes alongside an offshore asset-holding company. Contractors working on government projects need a mainland presence in the emirate where the project sits. None of these patterns is mandatory, but each reflects where the customers, investors and assets are, which is the right starting point for any structure.
The formation process in practice
Each authority has its own portal and forms, but successful company formation in the UAE follows the same logic regardless of route.
- Define the business model. List activities, customers by location, headcount, assets and investors for the first three years; this determines the route more than any fee comparison.
- Choose the route and structure. Decide on mainland, free zone, financial centre, offshore or branch, and whether a holding company is needed above the operating entity.
- Clear activities and approvals. Confirm that each activity is permitted and identify any regulator approvals or ownership conditions before applying.
- Prepare corporate documents. Gather passports, corporate shareholder documents and powers of attorney; arrange notarisation, legalisation and Arabic translation where needed.
- Draft the constitution and shareholder documents. Prepare the memorandum or articles and any shareholder agreement, making sure the two are consistent.
- Apply, lease and license. Reserve the name, submit the application, sign the lease or facility agreement and receive the licence and certificate.
- Complete post-formation registrations. Obtain the establishment card, open a bank account, register for corporate tax and VAT where required, and file beneficial ownership information.
Documents to prepare for company formation in the UAE
- Passports and, for residents, Emirates ID for every shareholder, director, manager and beneficial owner.
- For corporate shareholders: certificate of incorporation, constitution, register of shareholders and directors, good standing certificate and a board resolution approving the investment, notarised and legalised for use in the UAE.
- Powers of attorney for anyone signing on behalf of a shareholder.
- Beneficial ownership details identifying each individual who ultimately owns or controls the company.
- A short business plan and, for regulated activities, the relevant regulator's approval or no-objection.
- Arabic translations of foreign documents where the mainland authority requires them; the DIFC and ADGM accept English.
Budget more time for banking than for licensing. Banks carry out their own due diligence on owners, source of funds, activities and substance, and they often ask for contracts, business plans and evidence of a UAE presence. Preparing that pack alongside the licence application shortens the gap between incorporation and trading.
Tax and ongoing compliance
Every UAE company, whatever its route, falls within the Corporate Tax Law and must register with the Federal Tax Authority. Mainland companies pay 0% on taxable income up to AED 375,000 and 9% above that. A Qualifying Free Zone Person can pay 0% on qualifying income if it meets the substance, income, de minimis, transfer pricing and audit conditions. Groups need transfer pricing documentation for related-party dealings. Our corporate tax page covers the detail.
Beyond tax, companies must renew licences and leases, keep accounting records, update registers when shareholders or managers change, maintain beneficial ownership information and, for designated businesses, meet anti-money laundering duties. Our page on beneficial ownership and registers explains the filings.
Common mistakes
Choosing the route on headline cost
Set-up packages vary widely in price, but the cheapest licence is often the most expensive structure over three years. A low-cost free zone licence may not support mainland sales, enough visas or the substance needed for the 0% tax rate, and banks may be reluctant. Compare the total cost of operating, including premises, visas, audit, tax compliance and the cost of restructuring if the model changes. Our article on company setup costs in Dubai explains the components without relying on package prices.
Using one entity for everything
A single entity that trades onshore, holds intellectual property, employs staff and owns property concentrates risk and can spoil tax outcomes, for example by mixing qualifying and non-qualifying income in a free zone company. Separating holding, operating and asset-owning functions, often with a DIFC or ADGM holding company, can protect assets, simplify investment and exits, and keep each entity's tax profile clean. The structure should still have commercial substance, not exist only on paper.
Ignoring the investor's exit
Founders often incorporate quickly and only think about investors later. If the company is a mainland LLC with a template memorandum, introducing preferred shares, option pools and drag rights used to require restructuring. The 2025 amendments help, but implementing rules are still developing, and many institutional investors continue to prefer a common-law holding company. Consider at formation whether you will raise external capital, and structure accordingly.
Treating offshore as a trading licence
Offshore companies are not licensed to trade in the UAE and generally cannot sponsor visas. Using one to invoice UAE customers or employ staff can create licensing, immigration and tax problems, and banks increasingly question offshore entities without a clear purpose. Use offshore vehicles for holding assets, and pair them with a properly licensed mainland or free zone operating company.
Cross-border planning
Most UAE structures sit inside an international group. Investors from Bangladesh, India and China must consider outbound investment and foreign exchange rules at home; UK and Singapore groups must consider controlled foreign company rules and treaty access; Saudi-linked groups must weigh the Kingdom's regional headquarters requirements for government contracting. A UAE tax residency certificate can support treaty claims, but only where the company has genuine management and substance in the UAE.
TRW & Co works across Dhaka, Singapore, London, Dubai, China, Italy and Switzerland, so we can coordinate the home-country analysis with company formation in the UAE. For family groups, our family offices page explains how holding and governance structures fit together.
How TRW & Co helps with company formation in the UAE
We advise on structure, prepare and review documents, and coordinate with registries, regulators, banks and tax advisers. Where representation before UAE onshore courts or the DIFC/ADGM Courts is required, we work alongside locally licensed advocates and registered practitioners.
Route selection
We compare mainland, free zone, DIFC, ADGM, offshore and branch options against your activities, customers, investors and tax position, and recommend a structure.
Group structuring
We design holding, operating and asset-holding layers, including holding companies and SPVs, with clear reasons for each entity.
Documents and governance
We draft constitutions, shareholder agreements, resolutions and powers of attorney, and coordinate legalisation and translation across jurisdictions.
Investor-ready constitutions
We use the 2025 share class and exit tools, or a common-law holding company, so that the structure can take institutional investment without restructuring.
Regulated activities
We identify the regulators and approvals that apply, from financial services to healthcare and education, before the licence application is filed.
Post-formation compliance
We support beneficial ownership filings, register updates, licence amendments and the legal side of corporate tax and banking onboarding.
Checklist for decision-makers
- Where are your customers, and does the route give you lawful access to them?
- Are all activities permitted on that route, and are any regulator approvals or ownership conditions required?
- Will you raise investment or bring in partners, and does the structure support share classes and exits?
- Have you modelled corporate tax, including Qualifying Free Zone Person conditions where relevant?
- Do the premises support the visas and substance you need?
- Is there a bank-ready pack covering ownership, source of funds and business model?
- Who owns the compliance calendar after the licence is issued?
To discuss company formation in the UAE for your business, contact our Dubai team, or explore our practices for related corporate, tax and employment work.
Frequently asked questions
01Which is better for company formation in the UAE: mainland or free zone?
It depends on your customers and tax position. A mainland company can trade throughout its emirate, bid for government work and open branches elsewhere, but pays corporate tax at the standard rates. A free zone company suits international trading, logistics and regional hubs and can access the 0% rate for qualifying income, but needs a deliberate route to serve mainland customers. Many groups use both, with each entity serving a different part of the business.
02Why would a non-financial business set up in the DIFC or ADGM?
Mainly for the legal system. The DIFC and ADGM offer common-law company law, English-language courts and registries, and articles of association that can carry detailed investor rights. That makes them attractive for holding companies, joint ventures, family structures and businesses raising institutional investment. They are less suitable as the operating base for businesses that need to trade directly with mainland customers, which usually requires a mainland entity below the holding company.
03Can a foreigner own 100% of a UAE company?
Yes, in most cases. Free zones, the DIFC and ADGM have long allowed full foreign ownership, and since the 2021 reforms most mainland activities do too. Activities with strategic impact, such as security and defence, banking, insurance and telecommunications, remain subject to conditions set by the relevant regulator. Some professional licences held by non-GCC owners may need a UAE national local service agent, who has no ownership rights.
04What is an offshore company in the UAE used for?
Offshore companies, such as those registered with RAK ICC or as JAFZA offshore companies, are used to hold shares, permitted real estate, intellectual property and other assets, often as part of succession or group structures. They generally cannot trade in the UAE, lease operational premises or sponsor visas, and they act through a registered agent. They should be paired with a licensed operating company where the group carries on business in the UAE.
05Can a company move between the mainland and a free zone?
The 2025 amendments to the Commercial Companies Law created a route for companies to transfer their registration between emirates, between free zones and between free zones and the mainland, while keeping their legal personality, contracts and licences. The route depends on implementing resolutions and cooperation between the authorities involved, particularly for the DIFC and ADGM. Until it is available for your case, moving usually means forming a new entity and transferring assets and contracts.
06What are the ongoing obligations after company formation in the UAE?
Expect annual licence and lease renewals, accounting records and, in many cases, audited financial statements; corporate tax registration and returns; VAT registration and returns once thresholds are met; beneficial ownership records under Cabinet Decision No. 109 of 2023 or the DIFC and ADGM equivalents; register updates when owners or managers change; visa and payroll compliance; and anti-money laundering duties for designated businesses. A single compliance calendar reduces the risk of fines.
07Do I need a lawyer for company formation in the UAE?
Simple single-owner licences can be obtained directly through the authorities' portals or with a setup agent. Legal advice adds value where there are several shareholders, external investors, regulated activities, corporate shareholders from abroad, holding structures, or significant tax questions. In those cases the structure, constitution and shareholder agreement determine how the business can raise money, manage disputes and exit, which is where most long-term costs arise.
Sources and official materials
- Doing business in the UAE (u.ae) — Mainland and free zone business guidance
- Companies legislation (Ministry of Economy and Tourism) — Commercial Companies Law and related resolutions
- DIFC Registrar of Companies — DIFC entity registration
- ADGM Registration Authority — ADGM companies, SPVs and registry
- Corporate tax (Federal Tax Authority) — Registration, rates and free zone regime
- RAK International Corporate Centre — Offshore company registry
- Jebel Ali Free Zone (JAFZA) — Free zone and offshore company options
General information only, current as at 27 October 2026. It is not legal advice and does not create a lawyer–client relationship. UAE law differs between the onshore jurisdiction, the DIFC, ADGM and the free zones, and changes frequently; check current official sources and take advice on the facts of your matter.
