Free Zone Company Formation Procedure in Dubai
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Free Zone Company Formation Procedure in Dubai

August 25, 2015 | Company Setup

If you are setting up a business or a company in Dubai then you will want and need to know about the free zone company formation procedure in Dubai. In this article we will help you understand the free zone company formation procedure in Dubai. There are seven Emirates in the UAE and five of them have active free zones. All of them welcome foreign business and now the UAE Free Zones are home to around 10,000 companies. These companies vary from branches and subsidiaries of multinational corporate companies to one-man entrepreneurial businesses. The UAE has become one of the most preferred locations within the GCC because of its ability to allow for 100% expat ownership of a UAE company within certain geographical areas of the UAE.

1. Decide the free zone licence type

The first step is to decide the licence type that will allow your business activity. Free Zones offer a number of different business licences such as:

Free Zone Trading Licence

A trading licence allows you to carry out trading activities (selling, buying import and export) of goods and products. Most of the Free Zones will allow trading in around 3 categories of items under a trading licence.

Free Zone General Trading Licence

A Free Zone General Trading Licence allows you to deal with most types of except for banned goods and products which need special approvals. The general trading licence is usually more expensive than that trading licence.

Free Zone Consultancy / Service Licence

Service business such as consultancy, legal firms, accountancy etc. can choose a consultancy service.

Industrial Licence

Activities such as packaging, processing, assembling and manufacturing fall under the Industrial Licence.

Commercial Licence

This licence allows activities such as workshops, repairing etc.

2. Confirm business activities

Believe it or not, not all free zones allow all activities. Some free zones only specialise in certain activities so it is vital that you confirm that your activities are permitted by the Free Zone of your choice. Additionally, there are restrictions on the number of activities allowed.

3. Determine the legal structure of your company

The legal structure of your company will vary depending to the number and nature of the partners involved. Costs, documentation required will also change depending on the legal structure of your company. For example, documents needed for a corporate partner would be different from the documents required for an individual shareholder.

4. Confirm your business facilities

Never assume that all Free Zones offer all types of business facilities. Although most Free Zone in UAE offer space, warehouses etc. availability can be quite limiting. You need to assess the availability of the essential facilities that are provided by the Free Zone before committing to setup your business with them. In addition, different free zones are often specialist areas that are trying to promote certain types of businesses. Therefore it is important if you wish to be around certain ancillary businesses or customers that some thought is given as to what is the best location fro you to choose.

5. Verify the fees and other charges

This is the most important step in the Free Zone company formation procedure. Many investors who want to register their company in one of the Free Zones in UAE always go for the cheapest option available based on the costs but they do not understand the hidden charges and the extra fess to be paid for the services that are essential for the survival of their company. The total cost of your Free Zone business is based on two categories:

  • The cost of Dubai Free Zone company formation for a year
  • Yearly renewal costs

Some Free Zones actually offer packages that are cheaper than normal company formation costs. Investors often are unaware that these packages are not one time fees and because they don’t realise that they have to pay for the package charges every year. The normal yearly renewal charges could be cheaper than the cost of the packages, also most of these packages include only a business licence and not an office space. This is not useful if you are serious about your investment and your business and will require an office space. Also to be able to hire staff of over 3 people you will often need to rent an office space and the size of this space will determine how many visas are applicable.

If you are ready to spend resources and time to collect data, discover the hidden charges and test the real costs for Free Zone company formation procedure; then be prepared for sometimes conflicting information and replica costs and lots of time being wasted. However, if you are in a hurry and want to maximise your chances of being successful then its is highly recommended that you hire a professional business consultant in Dubai to uncover the hidden charges for you and deal with the process.

A free zone business consultant can take all of the weight off your shoulders by helping assist you through the entire procedure. They can:

  • Complete documentation for licensing
  • Take you through the various packages
  • Arrange a necessary point of contact
  • Organise meetings
  • Banking
  • Assist in visa application and residence permit

6. Submit your application form and other documents to the Free Zone

Every free zone is completely unique in its requirements for application and necessary documents. Each have their own timescales and depending on licence requirements. The most standard documents you will need these documents are:

  • Business plan
  • Bank statement
  • Passport copy
  • A UAE entry stamp

Successful business consultants will have experience in a variety of free zones and will be well versed in the different types of free zones. They should be able to assist you with understanding the process and also the best suited environment for your business and what challenges lay ahead when looking for the licence best suited.

7. Opening a bank account in Dubai

If you own a company that is registered in Dubai then you can open a corporate bank account for your company.

Opening a bank account can be a minefield to new entrants in the UAE. The UAE has multi national recognized banking brands as well as regional banks. Each bank tends to tailor itself to a particular market segment and depending on the ultimate aim of the corporate client and the activities and geographical locations the client is involved with will depend on where will be potentially be the best bank to place the client with.

The requirements to open a bank account vary from bank to bank but almost every bank will insist on personal presence of the signatories and will ask for Know Your Client documentation. This consists of:

  • Passport of the signatory
  • Bank reference letter
  • Past bank statements
  • Incorporation documents of the company

To ensure the smooth opening of the right bank account a business consultant may be required. Certain business consultants have better relationships with the banks and are more aware of there criteria, therefore they are able to save you a considerable amount of time and ensure that when the account is open it will have the facilities and banking appetite you require.


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