- September 9, 2023
- Posted by: DBS
- Category: Business
Setting up a business in Abu Dhabi Mainland can be a strategic move for entrepreneurs and businesses looking to establish a strong presence in the region. With a rapidly growing economy and a favorable business environment, Abu Dhabi offers numerous opportunities for investors. From company formation and business incorporation to pro services and corporate bank accounts, the process of business setup in Abu Dhabi mainland can be complex. However, with the right guidance and expertise, entrepreneurs can navigate through the legal and administrative procedures effectively, ensuring a successful business venture in this thriving emirate.
Table of Contents
Types of Business Entities in Abu Dhabi Mainland
Abu Dhabi Mainland offers a wide range of options for entrepreneurs looking to establish their business. Here are the different types of business entities available in Abu Dhabi Mainland:
Limited Liability Company (LLC)
An LLC is a popular choice for business setup in Abu Dhabi mainland. It requires at least two shareholders and offers limited liability protection. This structure allows foreign investors to have up to 49% ownership while a local Emirati partner must have a minimum of 51% ownership.
Branch of a Foreign Company
Foreign companies can establish a branch office in Abu Dhabi Mainland to expand their operations and take advantage of the thriving market. This structure allows the branch to operate under the parent company’s name and activities. However, it is important to note that the liability of the branch extends to the parent company.
A representative office serves as a liaison between a foreign company and its clients in Abu Dhabi Mainland. It is not permitted to conduct business activities or generate revenue. The representative office can engage in market research, promotion, and marketing activities on behalf of the parent company.
For professionals such as doctors, engineers, and consultants, a professional company setup is suitable. This type of entity allows individuals to provide their professional services in Abu Dhabi Mainland. It requires obtaining relevant professional licenses and permits.
Public Joint Stock Company (PJSC)
A PJSC is a publicly traded company in Abu Dhabi Mainland. It allows for the distribution of shares to the public and is regulated by the Securities and Commodities Authority (SCA). This type of entity is commonly used for large-scale enterprises and can have a minimum of 10 shareholders.
Private Joint Stock Company (PrJSC)
Similar to a PJSC, a PrJSC is a private limited liability company with share capital. However, it is not publicly traded and has limited shareholders. This structure is ideal for medium to large-sized businesses in Abu Dhabi Mainland.
Partnership companies in Abu Dhabi Mainland are formed between two or more partners. These partners share the profits, losses, and liabilities of the business. There are different types of partnerships, including general partnerships, limited partnerships, and joint ventures.
A sole proprietorship is owned and operated by a single individual in Abu Dhabi Mainland. It is the simplest form of business setup, where the owner has unlimited liability for all business debts and obligations.
A civil company is formed by professionals in Abu Dhabi Mainland who provide specific services or expertise. It allows professionals to pool their resources and work collectively under a common platform.
Branch of a Local Company
Local companies in Abu Dhabi Mainland can establish branches to expand their business operations. The branch operates under the same trade name and activities as the parent company. The liability of the branch extends to the parent company.
Legal Requirements for Business Setup in Abu Dhabi Mainland
Setting up a business in Abu Dhabi Mainland requires compliance with various legal requirements. Here are the essential steps to follow:
Acquiring a commercial license is crucial to legally operate a business in Abu Dhabi Mainland. The license is issued by the Abu Dhabi Department of Economic Development (DED) and depends on the type of business activity being conducted.
Trade Name Registration
Choosing a unique trade name and registering it with the DED is a necessary step. The trade name should align with the business activity and comply with the DED’s guidelines.
Obtaining initial approval from the DED is necessary before proceeding with the business setup process. This approval ensures that the proposed business complies with the regulations and guidelines of Abu Dhabi Mainland.
Notarization and Attestation of Legal Documents
All legal documents related to the business setup process, such as the Memorandum of Association, Articles of Association, and Power of Attorney, need to be notarized and attested by the relevant authorities in Abu Dhabi Mainland.
A lease agreement for a physical office space is required to register a business in Abu Dhabi Mainland. The lease agreement must comply with the regulations of the Abu Dhabi Municipality and be registered with the Ejari system.
A tenancy contract issued by the Abu Dhabi Municipality is mandatory for obtaining a commercial license. The contract outlines the terms and conditions of the premises and serves as proof of a legal business location.
Approval from Related Authorities
Certain business activities in Abu Dhabi Mainland require additional approvals from specific government authorities. For example, healthcare-related activities require approval from the relevant health authority.
Approval from Abu Dhabi Department of Economic Development (DED)
Once all necessary requirements are met, the final step is to submit the documents to the DED for their review and approval. The DED will issue the commercial license upon successful completion of the process.
Foreign Company Registration Certificate
For foreign companies establishing a branch or representative office in Abu Dhabi Mainland, a Foreign Company Registration Certificate from the relevant authority in their home jurisdiction is required.
Business Setup Process in Abu Dhabi Mainland
The business setup process in Abu Dhabi Mainland involves several steps. Here is a comprehensive guide on how to set up a business in Abu Dhabi Mainland:
Determine the Business Activity
The first step is to determine the business activity that you want to engage in. This will help determine the appropriate type of business entity and the necessary licenses and permits required.
Choose a Business Name
Choose a unique and relevant trade name for your business. Ensure that the name complies with the guidelines set by the Abu Dhabi Department of Economic Development (DED).
Submit the Required Documents
Once the business activity and trade name are finalized, gather all the necessary documents required for the business setup process. This may include identification documents, legal agreements, and other supporting documents.
Obtain Initial Approval
Submit the required documents to the Abu Dhabi Department of Economic Development (DED) to obtain initial approval. The DED will review the documents and assess the proposed business activity.
Prepare Lease Agreement
Find a suitable office space and negotiate a lease agreement with the landlord. The lease agreement must comply with the regulations of the Abu Dhabi Municipality and be registered with the Ejari system.
Notarize and Attest Legal Documents
Notarize and attest all legal documents required for the business setup process, such as the Memorandum of Association, Articles of Association, and Power of Attorney. This involves getting the documents reviewed and stamped by relevant authorities.
Obtain the Trade License
Once the notarization and attestation process is complete, submit the documents to the Abu Dhabi Department of Economic Development (DED) to obtain the trade license. The DED will review the documents and issue the trade license upon successful verification.
Get Approvals from Relevant Authorities
For certain business activities, additional approvals may be required from specific government authorities. This may include health authorities, municipality approvals, or sector-specific entities. It is important to ensure compliance with all relevant regulations.
Apply for Immigration and Labor Cards
Upon obtaining the trade license, apply for necessary immigration and labor cards for the employees. This includes visa applications, labor contracts, and Emirates ID registration.
Open a Corporate Bank Account
Once all the necessary approvals and licenses are obtained, open a corporate bank account in Abu Dhabi Mainland. A local bank account is required for day-to-day business transactions and to comply with financial regulations.
Benefits of Business Setup in Abu Dhabi Mainland
Setting up a business in Abu Dhabi Mainland offers several advantages for entrepreneurs. Here are some key benefits to consider:
Access to Local Market
Establishing a business in Abu Dhabi Mainland provides access to a thriving local market with a high disposable income. The population of Abu Dhabi consists of both Emiratis and expatriates, creating a diverse consumer base.
No Minimum Capital Requirement
Unlike some other jurisdictions, Abu Dhabi Mainland does not have a minimum capital requirement for business setup. This allows entrepreneurs to start their venture with minimal financial obligations.
Ability to Trade in Multiple Activities
Businesses in Abu Dhabi Mainland have the flexibility to trade in multiple activities and expand their operations as per market demand. This enables entrepreneurs to diversify their offerings and seize new opportunities.
Ability to do Business with Government Entities
Abu Dhabi Mainland businesses have the advantage of being able to bid for government contracts and collaborate with various government entities. The government in Abu Dhabi actively supports local businesses and promotes economic growth.
Flexibility in Hiring Employees
Abu Dhabi Mainland businesses have the flexibility to hire employees from both local and international talent pools. Labour laws in Abu Dhabi are designed to protect the rights of employees and provide a stable and productive work environment.
No Corporation Tax
Abu Dhabi Mainland does not impose a corporation tax on companies. This tax advantage allows businesses to allocate more resources towards growth and expansion.
Abu Dhabi is strategically located between Europe, Africa, and Asia, making it an ideal base for businesses looking to tap into multiple markets. The city boasts excellent air and sea connectivity, allowing for seamless trade and logistics operations.
Strong and Stable Economy
Abu Dhabi has a strong and stable economy backed by a government committed to diversifying its revenue sources. The city has made significant investments in infrastructure, tourism, and non-oil sectors, ensuring sustainable growth.
Presence of World-Class Infrastructure
Abu Dhabi Mainland offers world-class infrastructure, including state-of-the-art office spaces, transportation networks, and communication infrastructure. This enables businesses to operate efficiently and enhances their overall productivity.
Availability of Skilled Workforce
Abu Dhabi Mainland attracts a diverse pool of skilled professionals from around the world. The city offers excellent educational institutions and training centers, ensuring a continuous supply of qualified workforce across various industries.
Challenges of Business Setup in Abu Dhabi Mainland
While Abu Dhabi Mainland offers numerous opportunities for business setup, there are also certain challenges that entrepreneurs may face. Here are some common challenges to consider:
Language and Cultural Barrier
The official language of Abu Dhabi is Arabic, and conducting business may require a certain level of proficiency in the language. Understanding and respecting the local culture and customs is also important when dealing with local clients and partners.
Complex Legal Procedures and Documentation
The business setup process in Abu Dhabi Mainland involves complex legal procedures and documentation requirements. Navigating through the various legal requirements can be time-consuming and may require professional assistance.
Abu Dhabi Mainland is a competitive market with various local and international businesses operating in the region. Entrepreneurs need to conduct thorough market research and develop a unique value proposition to differentiate themselves from competitors.
Dependency on Sponsor
For certain types of business entities, such as LLCs, foreign investors need to have a local Emirati sponsor who holds a majority ownership stake. This dependency on a sponsor can sometimes limit decision-making authority and control over the business.
Licensing and Permitting Regulations
Abu Dhabi Mainland has specific licensing and permitting regulations that need to be followed. Businesses must ensure compliance with these regulations to avoid any legal issues or penalties.
Cost of Business Setup
The cost of business setup in Abu Dhabi Mainland can be relatively high, especially for small and medium-sized enterprises. Entrepreneurs need to carefully budget for initial expenses, including license fees, office space, visas, and employee salaries.
Local Partnership Requirement
For certain business activities, having a local Emirati partner is mandatory. This may restrict foreign ownership and control over the business. However, working with a local partner can bring valuable insights and connections in the local market.
Restrictions on Foreign Ownership
Certain sectors in Abu Dhabi Mainland have restrictions on foreign ownership. Before setting up a business, it is important to understand the regulations specific to the industry and assess the implications on ownership and control.
Labor Laws and Regulations
Abu Dhabi Mainland has stringent labor laws and regulations that businesses must comply with. This includes providing employee benefits, ensuring proper working conditions, and adhering to employment contracts.
Changing Economic and Political Environment
The economic and political environment in Abu Dhabi Mainland can be subject to changes and fluctuations. External factors such as global economic trends, oil prices, and political developments can impact the business environment.
Key Industries for Business Setup in Abu Dhabi Mainland
Abu Dhabi Mainland has a diverse economy with several key industries that offer significant opportunities. Here are some of the key industries for business setup in Abu Dhabi Mainland:
Oil and Gas
The oil and gas industry is a major contributor to the economy of Abu Dhabi. The city has vast oil reserves and is home to numerous international oil companies as well as national oil companies. There are opportunities for upstream and downstream activities, including exploration, production, refining, and distribution.
Abu Dhabi Mainland is committed to sustainability and reducing its reliance on fossil fuels. The city has ambitious goals for renewable energy generation, offering opportunities for businesses in solar power, wind energy, and other renewable technologies.
Tourism and Hospitality
Abu Dhabi is fast emerging as a global tourist destination, attracting millions of visitors each year. There is a growing demand for hotels, resorts, restaurants, and entertainment facilities. The tourism and hospitality industry offers significant investment and business opportunities.
Construction and Real Estate
Abu Dhabi Mainland is experiencing rapid urbanization and infrastructure development. The construction and real estate industry is booming, with opportunities in building construction, infrastructure projects, and property development.
The manufacturing sector in Abu Dhabi Mainland is expanding rapidly, with a focus on downstream petrochemicals, aerospace components, pharmaceuticals, and food processing. The city offers strategic advantages such as access to raw materials, skilled workforce, and proximity to key markets.
Abu Dhabi is home to numerous local and international financial institutions, including banks, asset management firms, and insurance companies. The financial services industry offers opportunities for banking, investment, insurance, fintech, and other related services.
Healthcare and Pharmaceuticals
The healthcare sector in Abu Dhabi Mainland is experiencing significant growth, driven by a rising population and increased demand for quality healthcare services. There are opportunities in hospitals, clinics, pharmaceutical manufacturing, medical equipment, and telemedicine.
Education and Training
Abu Dhabi Mainland prioritizes education and has invested heavily in world-class educational institutions. There are opportunities for private schools, universities, vocational training centers, and e-learning platforms.
The information technology sector is rapidly growing in Abu Dhabi Mainland, with a focus on digital transformation, cybersecurity, software development, and emerging technologies such as artificial intelligence, blockchain, and Internet of Things (IoT).
Transport and Logistics
Abu Dhabi Mainland is a major logistics hub in the region, connecting global markets through air, sea, and land transport. There are opportunities in freight forwarding, warehousing, distribution, supply chain management, and e-commerce logistics.
Government Support and Incentives for Business Setup
The government of Abu Dhabi Mainland provides various support and incentives to encourage business setup and foreign direct investment. Here are some key initiatives:
Foreign Direct Investment (FDI) Policies
Abu Dhabi Mainland has implemented investor-friendly FDI policies to attract and promote foreign investment. These policies provide incentives such as tax exemptions, streamlined processes, and simplified regulatory frameworks.
Ease of Doing Business Initiatives
The government of Abu Dhabi Mainland has implemented various initiatives to improve the ease of doing business. This includes reducing bureaucratic procedures, digitalizing government services, and enhancing overall business environment.
Free Zone Benefits and Advantages
While Abu Dhabi Mainland is not a free zone, there are certain designated areas that offer free zone benefits and advantages. Free zone areas provide 100% foreign ownership, tax exemptions, and simplified incorporation processes.
Abu Dhabi Mainland offers tax incentives and exemptions to promote economic growth and investment. Companies can benefit from exemptions on corporate tax, personal income tax, and import duties, depending on their business activities and location.
Access to Funding and Grants
The government of Abu Dhabi Mainland provides various funding options and grants to support entrepreneurs and businesses. This includes venture capital funds, loan programs, and grants for specific sectors or research and development activities.
Research and Development Support
Abu Dhabi Mainland encourages research and development activities by providing grants, funding, and tax incentives. The government promotes innovation, technology transfer, and collaborations between academia and industry.
The government of Abu Dhabi Mainland has invested heavily in infrastructure development, including transportation networks, energy facilities, industrial parks, and smart city initiatives. This infrastructure supports business growth and attracts investment.
Simplified Licensing Procedures
Abu Dhabi Mainland has simplified licensing procedures to facilitate business setup. The government has implemented online systems and streamlined processes for license applications, renewals, and amendments.
The government of Abu Dhabi Mainland has established legal frameworks and regulations to protect foreign investments. Intellectual property rights are safeguarded, and dispute resolution mechanisms are in place to provide a secure business environment.
Special Economic Zones
Abu Dhabi Mainland has designated special economic zones that offer specific benefits and incentives to businesses. These zones focus on specific industries such as technology, healthcare, manufacturing, or logistics, providing tailored support and advantages.
Cost of Business Setup in Abu Dhabi Mainland
The cost of business setup in Abu Dhabi Mainland can vary depending on various factors such as the type of business entity, office space, and business activity. Here are some cost considerations:
License and Registration Fees
There are fees associated with obtaining a trade license, registration with the Abu Dhabi Department of Economic Development (DED), and other relevant permits. These fees vary depending on the business activity and entity type.
Lease and Rent Expenses
The cost of office space or commercial property in Abu Dhabi Mainland should be factored into the setup costs. The rent for office spaces varies depending on the location, size, and facilities provided.
Government Fees and Charges
There are government fees and charges associated with various processes, including document attestation, visa applications, immigration, and labor card fees. These fees depend on the specific requirements of the business setup.
Office Space and Utilities
The cost of leasing office space includes not only the rent but also utilities such as electricity, water, internet, and other related expenses. These costs may vary depending on the location and size of the office.
Professional Service Fees (Legal, Accounting, etc.)
Seeking professional assistance for legal and accounting services is advisable during the business setup process. These services may incur fees, but they help ensure compliance with regulations and provide expert guidance.
Employee Salaries and Benefits
If hiring employees is part of the business plan, the cost of salaries, benefits, and employee-related expenses should be considered. Abu Dhabi Mainland has specific labor laws and regulations regarding minimum wages and employee benefits.
Marketing and Advertising Costs
Marketing and advertising are essential components of any business. The costs associated with marketing campaigns, advertising channels, and brand promotion should be factored into the setup budget.
Technology and Equipment Expenses
Investment in technology infrastructure, software, hardware, and equipment required for the business operation should be considered. The cost may vary depending on the specific requirements of the business activity.
Operational Costs (Inventory, Raw Materials, etc.)
If the business involves inventory or raw materials, the cost of procurement and storage should be included in the setup budget. It is important to assess the ongoing operational costs and plan for inventory management.
Maintenance and Security Costs
Maintenance and security costs, such as cleaning services, maintenance contracts, and security systems, should be considered to ensure a safe and efficient working environment.
Business Support Services in Abu Dhabi Mainland
Several business support services are available in Abu Dhabi Mainland to assist entrepreneurs during the business setup process and beyond. These services can provide professional guidance, streamline processes, and ensure compliance with regulations. Here are some commonly offered business support services:
Public Relations Officer (PRO) services in Abu Dhabi Mainland assist businesses with government documentation, visa processing, legal procedures, and other administrative tasks. PRO services ensure compliance and save time for entrepreneurs.
Company Formation and Registration
Specialized service providers offer assistance with company formation and registration processes in Abu Dhabi Mainland. They handle the necessary documentation, legal procedures, and liaise with government authorities on behalf of the client.
Accounting and Bookkeeping
Professional accounting and bookkeeping services in Abu Dhabi Mainland ensure accurate financial record-keeping, compliance with accounting standards, and taxation requirements. These services assist businesses in maintaining financial transparency and making informed decisions.
Legal and Compliance Services
Legal and compliance services encompass all legal aspects of business setup, contracts, intellectual property protection, and regulatory compliance in Abu Dhabi Mainland. Expert legal advice helps businesses navigate the legal landscape and ensure compliance with regulations.
Visa and Immigration Services
Visa and immigration services assist businesses with visa processing, work permits, and immigration-related documentation for employees in Abu Dhabi Mainland. These services ensure compliance with immigration laws and facilitate smooth employee relocation.
Recruitment and HR Solutions
Recruitment and HR solutions providers offer assistance with staffing, employee contracts, payroll management, and other human resource-related services. These services help businesses attract and retain talent while ensuring compliance with Labor Laws.
Market Research and Feasibility Studies
Market research and feasibility studies help businesses assess market demand, competition, and potential profitability. Expert market research service providers in Abu Dhabi Mainland gather and analyze data to support business planning and decision-making.
Marketing and Branding Consultancy
Marketing and branding consultancy services in Abu Dhabi Mainland provide expert guidance on marketing strategies, brand positioning, and digital marketing. These services help businesses develop effective marketing campaigns and build a strong brand presence.
IT Support and Solutions
IT support and solutions providers in Abu Dhabi Mainland offer services such as software development, website design and development, networking solutions, and IT infrastructure support. These services ensure smooth IT operations and enhance productivity.
Business Advisory and Strategy Services
Business advisory and strategy services provide expert guidance on business planning, growth strategies, market entry, and financial management. These services help businesses optimize their operations and achieve sustainable growth.
Abu Dhabi Mainland offers a conducive environment for business setup, with various types of business entities, government support, and a strong and stable economy. Entrepreneurs have access to a diverse market, numerous incentives, and key industries to explore. While there are challenges and considerations, navigating through the business setup process with professional assistance can lead to successful establishment and growth in Abu Dhabi Mainland.