In a dynamic investor hub like Dubai, investors are presented with different forms of company formation—Mainland, Free zone and Offshore. However, the Mainland Limited Liability Company (LLC) still remains the most popular type of business setup among entrepreneurs who plan to do business in the local market in Dubai. Those entrepreneurs who want to do business outside UAE only opt to set up a company in the free zones in Dubai, UAE.
LLC, one of the most commonly opted types of business set up in Dubai, can be defined as an independent legal entity owned by multiple shareholders in the UAE mainland. In the case of LLCs, a foreign investor can only own up to 49% of the company, and a UAE national is required to function as a sponsor who will own at least 51% of the company. In the case of a company with professional activity, it is not mandatory to have a local partner who owns 51% of a company, the company with professional services can be owned 100% by a foreign national provided that it must appoint a legal service agent. In LLC, the liability of the shareholders is limited only to the extent of their shares in the capital. As a distinct legal entity, the LLC company can get a Tax Identification Number (TIN), open a bank account and do business inside and outside UAE, all under its own name.
Reasons for the Immense Popularity of LLCs Among Investors
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Easy Business Setup Process
LLC company formation continues to be a popular type of business setup because there are only fewer hurdles to tackle while forming an LLC company in Dubai or UAE. Many initiatives have been implemented by the Department of Economic Development over the years to make the company set-up process easier. Most of the procedure is online, even recently Instant license has been started by DED for select activities without renting the space.
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Opportunity to Trade with the Larger UAE Market
Unlike the free zones, setting up an LLC company allows entrepreneurs to trade with the entire UAE market directly. On the contrary, free zones are incorporated within a designated jurisdiction of the emirate where the company is allowed to conduct business inside the same free zone. This is one of the main reasons why investors prefer mainland LLC to free zones.
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Benefits of Multiple Visas
While setting up an LLC company in Dubai, entrepreneurs are getting an opportunity to apply for unlimited visas. However, the number of visas one can apply depending upon the volume of office space. The general requirement is 100 sq. ft. of office or warehouse space per visa.
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LLCs can be Setup Anywhere in the Emirate
LLC companies need to rent a space (office/shop/factory) in the UAE. Unlike free zone companies, this offers an advantage as the businesses can take on office or warehouse space anywhere within the UAE to take advantage of the business location and falling rents.
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Limited Restriction on Business Activities
Investors who open an LLC company in Dubai get the freedom to carry out a wide range of business activities. The DED has listed a multitude of business activities and the LLC companies can carry out trade on any of those activities. On the contrary, setting up a company in the free zone puts a cap on the type of business activities companies can carry out. Apart from that certain activities, popularly known as special activities, such as construction, engineering, transport, banking, restaurants, audit, legal and insurance and travelling are allowed only on the mainland for which LLC is the most suitable.
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No Requirement for Paid Upfront Share Capital
LLC company formation in Dubai and the UAE comes with minimal application costs. And the major draw here is that the businesses are not required to put forward paid upfront share capital.
Paid upfront share capital can be defined as any amount of money already paid by investors in exchange for shares of stock.
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Freedom to Open Branches in the Other Emirates.
Setting up an LLC is one of the most effective methods to expand the business in the other emirates. Apart from giving the freedom to trade anywhere in the UAE, the LLC company formation allows businesses to increase their presence in the country with the opening of branch offices throughout the UAE. This is one of the biggest advantages of opening an LLC company in Dubai as opposed to setting up a business in the free zones.
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Sponsoring of Dependents
While setting up an LLC company in Dubai, UAE, the entrepreneurs become eligible for an investor visa, which grants them investor status in the UAE. This allows the investors to sponsor family members and domestic staff for their visas as well. The process for a visa for a spouse, child, maid or driver, is almost straightforward: entry permit, status adjustment, a medical fitness test, then Emirates ID registration and visa stamping.
Conclusion
Considering its numerous benefits including a wide range of business activities, access over the entire UAE market LLC remains the most popular type of company formation in UAE in contrast to the free zones. However, while setting up an LLC it is advisable to choose an experienced business consultant to make the procedure easier. Jitendra Business Consultants (JBC) assist the investors to establish an LLC in Dubai and UAE by offering expert guidance of business set up consultants in every step of company formation and registration, licensing, finding a local sponsor and the visa procedures.