Legal Requirements to Start a Company in UAE

Setting up a business in the United Arab Emirates sounds exciting—and it truly is. With its booming economy, business-friendly policies, and access to global markets, the UAE continues to attract entrepreneurs from around the world. But starting a company here also means navigating a unique legal and regulatory environment. Whether you’re an expat dreaming of launching a café in Dubai, an investor planning a tech startup in Abu Dhabi, or a freelancer eyeing a license in Sharjah—there are legal steps you simply cannot skip.

This guide walks you through everything you need to know about the legal requirements to start a company in the UAE in 2025—from choosing the right jurisdiction to registering your license, finding a sponsor (if needed), and staying compliant. If you’re serious about doing business here, this is your roadmap.

Why the UAE Is a Global Business Magnet

Before we dive into the legalities, let’s understand the “why.” The UAE’s strategic location between Europe, Asia, and Africa makes it a prime hub for trade, logistics, finance, and innovation. It’s home to over 40 Free Zones, world-class infrastructure, tax-free income in many cases, and a government that actively supports entrepreneurship.

In recent years, the UAE has made it easier and more flexible for foreigners to own and run companies independently—thanks to legal reforms like 100% foreign ownership in many sectors.

But the process isn’t as simple as opening a shop overnight. There are rules. And skipping a step could lead to fines, visa issues, or even business closure.

Step 1: Choose the Right Jurisdiction

Your business location in the UAE determines the rules you’ll follow. There are three main jurisdictions:

1. Mainland – Regulated by the Department of Economic Development (DED) in each emirate. You can do business across the UAE and work directly with the local market.

2. Free Zone – A designated area offering benefits like 100% foreign ownership, tax exemptions, and easy repatriation of profits. Each Free Zone has its own authority and rules.

3. Offshore – Ideal for holding companies, international trade, and asset protection. Not meant for doing business within the UAE itself.

Choosing the right jurisdiction depends on what your business needs. If you want a shop in Dubai Mall, you’ll need a mainland license. But if you’re launching an e-commerce site or consulting business, a Free Zone license might be quicker and cheaper.

Step 2: Decide Your Legal Structure

Next, you must choose the legal form or structure of your business. This will affect your ownership rights, liability, visa options, and taxation.

Here are common types:

Sole Proprietorship – Owned by one individual. Can be owned by an expat in Free Zones.
Limited Liability Company (LLC) – One of the most popular forms, especially for mainland businesses. Requires at least one and up to 50 shareholders.
Civil Company – For professionals like doctors, engineers, or consultants.
Branch Office – A legal extension of a foreign company operating in the UAE.
Free Zone Company (FZC or FZE) – Specific to Free Zones; ownership rules are flexible.

It’s best to speak with a legal consultant to decide what suits your vision. Your business type, funding model, and location will all impact this decision.

Step 3: Choose and Register Your Trade Name

Your company’s name must follow strict guidelines. It should reflect the nature of your business, not include offensive language, and avoid references to religion or political groups.

You’ll submit a few name options to the relevant authority (e.g., DED for mainland or the Free Zone registrar). Once approved, it’s reserved for your use.

Avoid names already registered or trademarked, and keep in mind that you may need to pay extra for certain terms like “group,” “international,” or “holding.”

Step 4: Apply for Initial Approval

Initial approval is your green light from the UAE government to proceed. It doesn’t yet allow you to start operations, but it shows that your proposed business activities and structure are accepted.

At this stage, you’ll usually submit:

Application form
Passport copies of owners/shareholders
Business plan (for some sectors)
NOC (No Objection Certificate) from current sponsor (if applicable)

Once you get initial approval, you can move forward with signing agreements, leasing office space, and preparing documents.

Step 5: Draft the Memorandum of Association (MOA)

The MOA is one of the most critical legal documents. It defines the ownership shares, responsibilities, profit-sharing structure, and management roles within the company.

This is especially important for LLCs and partnerships. It must be drafted in Arabic (and optionally in English), signed by all partners, and notarized.

In Free Zones, this may be replaced by Articles of Association or simpler internal agreements, depending on the authority.

Step 6: Rent a Business Premise and Get Ejari (for Mainland)

In the mainland, every business must have a physical address and lease agreement, registered with the Real Estate Regulatory Authority (RERA). This process is called Ejari.

Even virtual or desk-sharing options may require a tenancy contract. The office size should match the number of visas you’ll request later. In Free Zones, many authorities offer ready-to-use co-working spaces or flexi-desks that come bundled with your license.

Step 7: Submit All Documents and Pay Fees

Once you have the initial approval, name reservation, MOA, and tenancy contract, you can submit everything for final license issuance.

Expect to pay for:

License fee
Name reservation
Ejari or office rent
Registration and notary fees
Partner visa quota, if applicable

The cost varies widely depending on the emirate, Free Zone, and business type. A simple freelance license may start from AED 5,000, while a mainland trading company may go upwards of AED 30,000.

Step 8: Apply for Visas and Labor Cards

Once your company license is issued, you’re eligible to apply for your Establishment Card and Investor or Employment Visas. This allows you and your staff to live and work legally in the UAE.

You’ll go through medical tests, Emirates ID processing, and immigration clearance. If you plan to hire employees, you must register with the Ministry of Human Resources and Emiratisation (MOHRE) for labor cards.

Each visa is linked to your business setup and the space you’ve rented, so planning your office size early is important.

Step 9: Register for Taxes and Corporate Compliance

In 2023, the UAE introduced a 9% corporate tax for businesses earning more than AED 375,000 per year (free zones may still enjoy exemptions under certain conditions). So depending on your structure and profits, you may need to:

Register for corporate tax with the Federal Tax Authority (FTA)
Maintain proper bookkeeping
File tax returns annually

If your business earns over AED 375,000 in taxable supplies, VAT registration is also mandatory. This includes submitting monthly or quarterly VAT returns.

Freelancers or small businesses earning under this limit are not obligated but may register voluntarily for credibility and partnerships.

Step 10: Stay Compliant with Renewals and Regulations

Business setup doesn’t end with getting a license. You’ll need to renew your license annually, maintain a physical office (in most cases), and file any required documentation or declarations.

Missing a renewal can lead to fines, visa cancellation, or blacklisting.

In 2025, UAE authorities are also cracking down on AML (Anti-Money Laundering) regulations. If your business falls under a “Designated Non-Financial Business or Profession (DNFBP)”—like real estate, gold trade, or auditing—you’ll need to register with the goAML system and file reports.

Staying legally compliant is not just good practice—it protects your reputation and future growth.

Common Mistakes to Avoid

Skipping legal advice – What works for your friend may not suit your business. Always get a second opinion.
Underestimating costs – Licenses, visas, rent, and taxes add up. Budget wisely.
Not researching Free Zone rules – Every zone has its own limits on business activities and office requirements.
Using a fake sponsor – In mainland, working with a trustworthy Emirati sponsor or service agent is crucial.
Ignoring visa quotas – Don’t assume you can hire unlimited staff. Your office size and business type decide your quota.

Final Thoughts: The UAE Wants You to Succeed — Legally

The UAE is not just a land of opportunity. It’s a place that rewards those who do things the right way. Yes, the paperwork may feel overwhelming, and yes, there are rules at every step—but the process is manageable if you approach it with the right information.

Many successful businesses today started with just one license and a small desk. Whether you’re launching a tech startup, opening a food truck, or offering online consultancy, getting the legal foundation right is your first step to long-term success.

So take your time. Consult the right people. Understand the law. And build not just a business—but a brand that’s strong, scalable, and legally sound.