Mainland vs Free Zone
A mainland company is a company licensed by the Department of Economic Development (DED) in the relevant Emirate of the United Arab Emirates. On the other hand, a free zone company is licensed by one of the Free Zone Authorities and covers a limited geographical area. The main factors to consider in choosing which type of company structure is most suitable are:
- Proposed business activity
- Location of your customers
- Type of customer (individual, business, government, etc.)
- Proposed physical location
- Number of employees required
A mainland company has no restrictions regarding who you can trade with or where you can trade in Dubai. If you wish to offer services to the government or trade directly with consumers, then it is essential that you establish a mainland company. That is because free zone companies are restricted to operate within their free zone, and thus, are not allowed to offer their services directly to customers outside their jurisdiction.
In addition, a mainland company has no limitation on the number of visas that can be issued. Visa quota is approved based on your commercial space. The more office space you have, the greater number of visas you can issue, even to an unlimited number.
With a mainland company, you can be located anywhere in the mainland of Dubai, whereas with a free zone, there are limited options for commercial space. It is also possible to start a mainland company without a physical space, if you do not require this at the outset.
Widest Activity Offering
Mainland companies have much more business activities on offer too, while free zones have limited activity offerings, which often relate to the themed category for that particular free zone.
A mainland company can grow better with your business and you can open branches in multiple locations in the mainland, while granting additional visas if required.
100% Ownership Control
It is a common misconception that all Mainland Companies must have a Local Partner who holds shares in their business, and often for this reason alone, investors opt for a Free Zone company. If you establish a mainland company with a professional activity (e.g. project management, accounting or technical services), it is possible to own 100% of the company in the legal form of a Sole Establishment (one shareholder) or as a Civil Company (more than one shareholder).
You still require what is called a Local Service Agent, but the Local Service Agent carries out broadly the same function as the Free Zone Authority does, which is to provide your company with access to labour and immigration.
For commercial activities, where a Local Partner is required and the company must be a Limited Liability Company (e.g. trading), Virtuzone can provide you with a Corporate Nominee to act as your Local Partner, which allows you to retain all ownership control of your business and protects you against the risks of having an individual Local Partner. With the appropriate risk mitigation documentation in place, you can retain full ownership of your company.
For more information about company formation in the UAE mainland or free zones, please fill out the form below.