As per the law, to conduct economic activities in mainland Dubai, outside the free zones, a corporate entity licensed by the Dubai Department of Economic Development (DED) must be established. The different types of registered companies are: Joint stock companies (JSC), Limited liability companies (LLC), unincorporated joint ventures and branch or representative offices of foreign or free zone companies.
Onshore LLCs are granted custom duty exemption in UAE, GCC and countries of GAFTA, (unlike UAE Free zone companies) when trading in UAE and GCC. A UAE mainland company (UAE LLC Company) has no restriction on real estate ownership and is not required to pay 5% customs duty on imported goods.
However, there are foreign ownership limitations to an LLC Company Setup as per the Mainland Commercial Companies Law (CCL), which requires at least 51% of the share capital of all mainland UAE Companies, outside free zones to be held by UAE nationals or their wholly-owned companies.
The main risk is that the 51% local national shareholder has control over the Investors’ UAE Mainland Company, dividends and capital gains distributions and its bank account.
Strengthen the investor’s control over the 51% local shareholding of his mainland company formation – Uses of ADGM SPV to establish a common law corporate entities layer.