As a result of perks such as tax exemptions, complete foreign ownership, and ease of starting a business, Freezones are often the preferred choice of investors for company formation. Contacting one of the finest law firms with Best Lawyers in Dubai can help someone in this area to a great extent.

But, as your business expands, you will eventually want to venture outside the Freezones. Freezone companies can operate in Mainland as long as it conforms to UAE law. A services company can establish a branch of Freezone company in the mainland or as a cent per cent affiliate of Free Zone Company in the mainland. An Emirati National will be assigned the role of a Local Service agent when establishing the branch. Through adhering to the UAE customs regulations, Goods exported from the Free Zone company can be made to the Mainland one. In spite of its geographic location within the UAE, the Free Zone is treated as a separate jurisdiction for the purpose of trading.

We will take a quick look at what are the options available to Freezone businesses to do business on the mainland:

Establishing a Freezone Company Branch with the Department of Economic Development

Freezone Companies can expand their business to the mainland through registering its branch with the Department of Economic Development and the MOEC. The branch should operate in the same field as well as should share the same name as its parent firm. A Freezone company can own 100 per cent of the branch. 

Moreover, there is a need to appoint a local service agent in the United Arab Emirates. If over 51% of the Freezone company is owned by Emirati citizens, it is not necessary to engage a local service agent. 

Be aware that a local service agent has no involvement in the operation of the branch. As local agents, their job is to make sure the branch’s operations can continue in Dubai. The agent is not entitled to control, manage, profit-share, or own an asset of the branch.

A Branch of a Freezone Company is Forbidden From Certain Activities

The activities of the Freezone companies on the Mainland are subject to a few restrictions. Freezone entities are restricted from activities such as trading, labour supply service, commercial agencies. They are not issued with restaurant licenses. 

Requirements For Branch Formation

• The Department of Economic Development will issue trade name approval certificates
• A copy of the general manager’s passport and the local service agent’s passport
• Freezone company’s Corporate documents copies, containing a properly notarized resolution for opening a branch and the POA for general manager.
• Publicly notarized local agent agreement
• Assurance of 50000 Dirhams payable to the MOEC.
• A fee of 15,000 Dirhams is payable to the Ministry of Economy.

A penalty of 100,000 Dirhams is imposed on the Freezone company engaging in business on the mainland without having the appropriate approval.

Creating a Civil Work Company

A civil work company is set up to conduct professional activities. It’s ownership may be held by a foreign individual or a foreign corporation registered in a free zone as long as the activities of the corporate body correspond to those of the civil work company.

Civil Work Company should engage Emirati local service agents. As with local sponsors, the local service agents do not own shares in your company. Rather, their duty is to correspond with government departments on your behalf and help with every legal requirement, such as obtaining a work permit, obtaining a visa, and more. 

They can also consult the Best Lawyers in Dubai for having a clear picture of the whole legal procedure.

The Formation of a Limited Liability Company

 The Emirati citizens are required to own 51% of the shares of the LLC company in order for the company to be registered. The number of shareholders in an LLC company can range from 2 to 50. Each of them is responsible for the extent that he or she has invested in the company’s capital. 

The mainland LLC company can form a partnership with a Freezone company and conduct business on the mainland of Dubai. 

Most of the companies registered in the Freezones will be able to do business in the Mainland of Dubai if they contact a local distributor who has a DED license to target the local market. The business will have a requirement to expand globally as it grows, and businesses in free zones can take advantage of this opportunity.

As with the registration of companies in Freezones, the licensing process in DED is smooth and transparent. To be able to conduct mainland operations, business entities must submit an application form to the DED and pay the fee for issuing the company license.

A Freezone is a Place Where Customs Duties Are Not Charged

Even though Freezones are beyond the customs territory they have certain controls over Freezones. The UAE customs department provides Freezone importers with a valid importer code which is a must-have for easy trading. 

Freezone companies have the liberty to import goods and types of equipment from foreign markets to the UAE without any custom taxes. They only have to submit certain documents in order to get clearance from the Customs Department of UAE. 

Then the customs will give them the Freezone Transit Inn and an issuance bill with which they can sell their products to the local companies in UAE or other GCC countries.

After ensuring all the paperwork and required documents are in place probably with the assistance from the Best Lawyers in Dubai they can have a smooth transfer of goods.

The Freezone company can seek help from a distributor or retailer who is successfully operating a business in the mainland. They will assist the company with trading, distributing and retail business in the mainland of the UAE.

To conduct business operations the distributor must have a trade license issued by the Department of Economic Development (DED), which is the authoritative figure of all the economic activities carried out outside the Freezone. They issue the license that is necessary to start a business in the mainland for both individuals and businesses. To learn more you can get in touch with the Best Lawyers in Dubai. 

About GH International

GH International is a reputable firm offering legal and corporate services throughout UAE and Middle East. They have the Best Lawyers in Dubai with the intend of satisfying all the legal needs of the clients through friendly and professional service. They also have the finest Property Lawyer Dubai and offers top-notch Wills and Probate Service.

With 1500 plus satisfied clients, highly qualified lawyers, an approachable team and free consultation, GHI is none other than the prime option for any and all legal services. Other than the quality Wills and Probate Service with great Property Lawyer Dubai they also offer assistance to business formations in their successful journey from the very beginning.