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When to choose a Freezone company over a Mainland Company?

When to choose a Freezone company over a Mainland Company?

Since UAE has emerged as an investment hub over last few years, many persons are interested in setting up a company in UAE. However, a serious question that is confronted by all the interested person is whether to go with Mainland or Free zone company. Setting up a company in either of the two have their own benefits and pitfalls, depending on certain key factors. In this article, we will discuss the benefit of setting up a Freezone company over a Mainland company along with the inputs of best company formation lawyers of UAE.What is a Mainland company?
It is an inland company operating in the local market as well as outside the UAE. With respect to commercial and professional license, it offers complete flexibility. For setting up a Mainland company, a local service agent is required. A Mainland company is registered with the Department of Economic Development (DED). It is responsible for all the core incorporation activities, such as charge of registration, licensing, and issuance of trade license.

The standard shareholding agreement involves that a UAE national sponsor holds 51% equity and the foreign shareholder holds 49%. (For drafting shareholding agreement or service agent agreement, you can contact our top lawyers of UAE.

What is a Freezone company?
It is a separate legal body having its own sets of rules and regulations. All the Freezones companies are permitted to carry on their business within or outside the UAE. However, a major distinction between a Mainland and a Freezone company is that a Freezone company cannot operate in a non-Free zone without the assistance of a local agent, whereas a Mainland company can operate anywhere in the UAE. Setting up a Freezone company is a lucrative option for the investors, owing to its benefits such as world class infrastructure, tax incentives, and asset protection.

Why you should choose a Free zone company over a Mainland company?

  1. The Free zone companies offer complete ownership and control to the foreign investors. It is not necessary to appoint a local service agent. This is a prime advantage of setting up a Freezone company over a Mainland one, as in the case of the letter, it is mandatory to appoint a local service agent.
  2. The operation of a Free zone company is very simple and cost effective. It is not required to have a physical office space, and can be operated virtually. However, in the case of a Mainland company, it is essential to have a minimum annual leased out space of 200 square feet
  3. Each Free zone license offers 2 visas as part of the smart office package. Some Freezones also offers 3-6 visas. (For all visa related information, contact our best law firm of UAE)
  4. For setting up a Freezone company, there is no need of seeking approval from an external entity before issuance of a license, whereas, in case of a Mainland company, it is essential to obtain the necessary government approvals beforehand.
  5. In a Free zone company, capital and profits are fully repatriated.

Setting up a Freezone company over a Mainland one offers some great benefits, such as 100% ownership, less government intervention, tax incentives, etc. BSB Legal is a top company formation law firm of Dubai with best lawyers having wide range of experience in setting up of a Freezone company. To register your Free zone company with BSB Legal, contact us below.

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