How to Setup a Business in a Free zone

Setting up a free zone company in the UAE comes with a lot of legal and administrative aspects to be dealt with. The UAE has numerous free zones with each having a different set of rules, regulations, facilities, licensing, and visa provisions. Though focusing on the business remains the top priority for entrepreneurs, they often get entangled in gathering details about the administrative procedures, documentation, and legal matters of starting up a business. Through this article, we aim to provide generalized information that is common to almost all UAE free zones for business setup.

Here are the 5 steps to set up a business in a free zone:

1. Determine the type of free zone entity
2. Name your free zone company
3. Apply for a trade license
4. Choose an office space
5. Register your company, and get the trade license

1. Determine the type of free zone entity

The first and foremost step to form a free zone company is to determine the legal entity your company would take up. A free zone company in the UAE can be one of the below-mentioned entities:

1. Free Zone Limited Liability Company (FZ LLC) or Free Zone Company (FZCO)

These types of free zone companies can have multiple shareholders with the permitted number going up to 50. The shareholders of an FZCO can either be individuals or companies or a combination of both.

2. Free Zone Establishment (FZE)

Unlike a Free Zone Company, a Free Zone Establishment can have only a single shareholder.

3. Branch of a company

A branch may be defined as an outlet of an existing local or foreign company. A branch holds the same name as the parent company and must conduct the same activities as the parent company. A branch has the same legal standing as that of its parent company.

2. Name your free zone company

The naming of your free zone company must be compliant with the rules laid down by the free zone authorities. Besides basic requirements like the name being unique, here are some requirements to be satisfied for your trade name to be approved.
The trade name must:

• be in line with the business activity and the legal status
• have a suffix indicating the legal form of your company (ex: FZE for Free Zone Establishment)
• not have references to any religion
• respect the society’s morals and not violate the public order
• not have names of any of the UAE’s 7 emirates
• not contain names of any governing bodies

3. Apply for a trade license

The type of trade license you will apply for simply depends on the business activities your free zone company would engage in. The license you apply for could be professional, commercial, industrial, or any other type depending on your business activity and the free zone issuing it. You may also apply for a license that combines different types of activities if your free zone has provisions for it. IFZA in Dubai is one of the select free zones that allow you to combine commercial, industrial, and professional activities. Most free zones offer packages for multi-year licenses as well.

4. Choose an office space or flexi-desk

Free zones in the UAE offer abundant options for office spaces. Based on factors like budget, staff size, and other business requirements, you may choose a suitable workspace. While a flexi-desk facility is usually offered free of cost with the license, the available options for physical office spaces range from fixed desks to dedicated furnished/unfurnished offices, and shell and core spaces. While most of these spaces are provided on lease, some free zones offer office spaces for sale as well. If required by your business, you may opt for workshops, warehouses, and other storage spaces.

5. Register your company, and get the trade license

The procedures and documents required for registering the company and obtaining the trade license vary from one free zone to another. Below we have compiled a generalized list of documents to be submitted and the process followed for registering your company and issuing your trade license.

Documents Required for Company Registration

For individual shareholders

• Passport copy of the shareholder(s) and manager(s)
• Latest UAE entry stamp / visit visa copy / residence visa copy and Emirates ID of the shareholder(s) and manager(s) (for UAE residents)
• Address proof of the shareholder(s) and manager(s)
• Passport-sized photo of the shareholder(s) and manager(s)

For corporate shareholders

• Memorandum of Association (MOA) and Article of Association (AOA)
• Trade license (for an existing company)
• Certificate of incorporation
• Board resolution

Process for Free Zone Company Registration

1. Trade name reservation with the free zone
2. Submission of application form along with the signed documents
3. Issuance of trade license

Once the trade license has been issued, the visa application may be initiated.

Process for Issuance of Residence Visa

1. Apply for an establishment card of the company.
2. For emirates other than Dubai, it is mandatory to register for e-channel services.
3. You may then proceed with the filing of the e-visa application by submitting the below-mentioned documents
   • Passport copy
   • Current visa/cancellation paper (if you have a previous UAE visa)
   • Establishment card
   • Trade license
   • Passport-sized photo (with white background)
4. Upon issuance of e-visa, you may enter the UAE through an e-visa (If you are outside the country) and the application for change of status is filed. After entering the country or upon completing the in-country change of status, you are required to complete the medical test and Emirates ID application within thirty (30) calendar days.Following are the documents required for the medical test and application of Emirates ID:
   • Original passport
   • Copy of the e-visa
   • Copy of change status confirmation
   • Trade license
   • Establishment card
   • Passport-sized photos
5. Upon passing the medical test, the next step is to proceed with the visa stamping application and biometrics process for Emirates ID.
   Following are the documents required as originals/copies for the visa stamping and Emirates ID application:
   • Passport
   • Passport-sized photos
   • E-visa issued by the free zone
   • Change status confirmation
   • Stamped medical test result
   • Stamped Emirates ID application
   • Trade license of the company
   • Establishment card of the company
   • Health insurance (mandatory for some emirates)
6. This is followed by the stamping of the visa on your passport.
7. Finally, the Emirates ID is issued by the relevant department.

We hope this article has simplified the legal and administrative aspects of setting up a free zone company in the UAE. At Legal Inz , we offer comprehensive legal advice and day-to-day legal support for free zone business setup in the UAE.