License categories and approvals
Like many other countries, UAE has different license categories for companies functioning in different sectors. Based on activities that a business entity plans to undertake, there are three categories –
Commercial license – for companies engaged in trading activities like buying and selling of goods, imports and exports, transportation and all other commercial activities.
Industrial license – for those undertaking (or planning to undertake) activities related to manufacturing and industrialization.
Service license – this is issued to those people or businesses who are engaged in providing professional services which entirely depends on the skills, knowledge and experience of the professional concerned like professionals, artisans, craftsmen etc.
The license issuing and approval authority/agencies also differ based on the sectors of economy which a business pertains to. While department of Economic development in Dubai is the principal agency for issuing licenses to companies centered in Dubai, there are other agencies that need to approve them based on their category of business. Also some categories like Health Services, Transport, Media, Engineering, Construction, Printing, Publishing, Food Services etc. require more approvals than, say a, trading company. See the table below for some license approval authorities.
In addition, business registration must also have the involvement of the Dubai Chamber of Commerce and Industry.
Business structures and Ownership
Based on the statute under which a company is being registered, there could be two types of companies in UAE, one established under the Commercial Companies Law and the other regulated by the Civil Code. The Federal Law No. 8 of 1984 specifies the following legal business structures which were amended by Federal Law No. 1 of 1984, Federal Law No. 13 of 1988, Federal Law No. 15 of 1998 and Federal Law No. 4 of 2000. The difference between these categories is on the basis of ownership dynamics.
Barring the exemptions, every company, other than those with a professional license, set up in Dubai or elsewhere in the UAE is required to have no less than fifty-one percent (51%) shareholding by UAE nationals.
Company law is not applicable to business set up in free zones, sole proprietorship, Companies engaged in the field of oil exploration, extraction, manufacturing and transportation and business of electricity and gas, water desalination and other related activities. Certain companies are excluded from the jurisdiction of Company Law by a resolution of the Council of Ministers.
See below for the legal business structures available in UAE.
The exception to the requirement of at least 51% would be any one of the following seven conditions: