The licensing and other administrative procedures for establishing businesses in Free Zones in other Emirates are more or less similar However, the capital requirement and the structure for the companies that can be set up in each Free Zone is dependent on the laws and regulations formulated by the respective Free Zone Authority. The type of documentation, costs and time required for registration of any business entity also depends upon its proposed activity and structure, and the prescribed regulations of each Free Zone.
A company in the Free Zone can be established either as (a) Branch of a foreign company including a company registered in the UAE or (b) Free Zone Establishment (FZE) or (c) Free Zone Company (FZC). Given below is a brief summary of the relevant procedural formalities:
a) Branch of a Foreign Company
There is no minimum capital requirement for establishing a branch of a foreign company. The licensing procedures require submission, to the Free Zone Authority, of the parent company’s incorporation and related documents, board resolutions and other specified details. Licenses are issued upon verification of these documents and after payment of the agreed rental and license fees. If required by the company, the Free Zone Authority can sponsor employees on its behalf. The provision of a bank guarantee and payment of visa charges is a pre-condition to such sponsorship of employees.
b) Free Zone Establishment (FZE)
A separate legal entity called the Free Zone Establishment (FZE) with limited liability can be formed with its Head Quarters in the Free Zone. All Free Zone Establishments are regulated solely by the Free Zone Authority and can only have a single shareholder and at least one Director, who must be a resident of the UAE. After acceptance of the application and other required information and documents, permission will be granted by the authorities and all relevant details will be recorded in the Free Zone Establishment register and a Certificate of Formation will be issued accordingly. The FZE will be able to conduct its business as permitted in the license.
c) Free Zone Company (FZC)
The Free Zone Company (FZC) will be a private Company, and therefore, no invitation can be made to the public to subscribe for its shares. The FZC shall have a minimum of two and maximum of five shareholders. The FZC shall have a Board of Directors consisting of not less then three persons (at least two directors and one secretary) although the offices of Director and Secretary can be held jointly by a single person.
At least two of the Directors and the Secretary must be resident of the UAE. The FZC must comply with the conditions stated in its license and also the implementing regulations of the Free Zone Authority. All the above entities are required to comply with the prevailing regulations of the respective Free Zones covering registration formalities, minimum capital requirements, management and other related matters. These entities can operate in the various Free Zones under one or more of four different categories of licenses namely, Trading, Industrial, Services and National Industrial License.
Each license is categorized by the nature of the permitted activity. Some limitations in the licensing of activities would, however, be applicable in certain Free Zones covering specific areas of operations e.g.
The Dubai Technology and Media Free Zone, DUCAMZ, DIFC, Gold and Diamond Park, Dubai Healthcare City, Dubai Maritime City etc.
* A Trading License allows the holder to import, export, sell, distribute, and store all the items specified on the license. Sales in the UAE, however, must be carried out through a distributor or agent.
* An Industrial License allows the holder to import raw materials, carry out the manufacture of specified products and export the finished products to any country. Products manufactured can be sold in the UAE through a distributor or agent
* A Service License allows the holder to carry out the services specified in the license within the Free Zone subject to compliance with the regulations specified in that behalf.
* The National Industrial License is designed for manufacturing companies which are registered either within or outside the UAE. The ownership or shareholding must be at least 51 per cent AGCC (Arabian Gulf Cooperation Council – Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Emirates). The value added to the product in the Free Zone must amount to a minimum of 40 per cent of the sale value. This license allows its holder the same status as local or AGCC companies inside the UAE. A National Industrial License allows the holder to import raw materials, carry out the manufacture of specified products and export the finished products to any country. The activity must conform to the National Industrial Production Certificate, issued by the Ministry of Finance & Industry on behalf of the Company. Companies holding a National Industrial License qualify for customs duty exemptions on their products imported into the AGCC states.