company formation and management in Abu Dhabi

About Business setup

For companies looking to set up in Abu Dhabi, there are a number of options available. A foreign company that plans to open a business in the UAE as a whole can choose to set up as a branch, representative office or registered company, or it can appoint a commercial agent to sell its products in the UAE market or export them.

Limited Liability Companies in Abu Dhabi can be 100% foreign owned for most sectors and industries. For some industries such as oil & gas or companies that wish to do work with ADNOC and require SPC approval, a 100% foreign owned LLC in Abu Dhabi provides no certainty that SPC approval will be obtained. SPC/ADNOC Approval is essential to apply for ADNOC Registration/ CICPA Passes, so it can be necessary for clients to have at least a 1% Local Partner. Sovereign Corporate Services can act as 1% local partner to obtain SPC approval.

For those foreign investors who are reluctant to give up control of their UAE business, Sovereign Corporate Services has a solution to mitigate this requirement in Abu Dhabi. Please click here for more details.

New companies can also choose to conduct their activities from a Free Zone, which is a designated, self-regulated area set up to catalyse economic activity within an emirate and which is governed by its own set of rules and regulations. A free zone entity permits a foreign investor to own 100% of the shares without the need to appoint a ‘local sponsor’.

There are three main free zones in Abu Dhabi – the Abu Dhabi Global Market (ADGM) financial free zone, the Masdar City clean technology and renewable energy economic zone, and the ‘twofour54’ media-based free zone. Sovereign Corporate Services can assist with company incorporations in each of them. If a company chooses to locate itself in one of these zones they will be required to have a registered office, which Sovereign can provide.

However, free zone companies are subject to a number of restrictions and are only permitted to conduct their activities within the vicinity of the respective free zone. Investors should carefully consider these restrictions when evaluating whether incorporating a company in a free zone is consistent with their objectives.

It is essential to have a full understanding of your options before deciding how to establish a business presence in Abu Dhabi. Sovereign’s team in Abu Dhabi is highly experienced and can provide expert advice and support on all aspects of company incorporation in Abu Dhabi and its free zones.

Setting up a business in Abu Dhabi generally involves six key steps:

• Determining economic activity type – Before initiating the procedures for issuing the business licence, it is essential to determine the activity/activities of the intended business. The legal requirements and fees vary according to the nature of the activity. In addition, some activities require fulfilling requirements such as the location of the business and the total area of the facility.
• Determining legal form of business – There are several legal forms and structures that are appropriate to the needs and nature of your business such as a Limited Liability Company or Limited Liability Partnership. Different rules and regulations apply to each legal form and ownership type.
• Trade Name Registration – Having selected the activity and legal form of the business, a trade name that distinguishes the business from others and conforms to the nature of the activity and legal form must be selected.
• Obtaining initial approval – Having obtaining the trade name certificate, an investor can request an initial approval certificate, which enables him/her to proceed with applying for a business licence and permission for the required business activity. For foreign investors, obtaining the approval of the General Directorate of Residency and Foreigners Affairs (GDRFA) is compulsory. At this stage, the investor can also seek approval from the Commercial Protection Division for its proposed business premises.
• Obtaining approvals of relevant authorities – Following initial approval, an investor can approach the relevant authority to obtain approval according to its intended business activity or activities. Some activity types, however, only require the approval of Department of Economic Development (DED).
• Issuing Business Licence – Having obtained the approval of the relevant authorities, if any, the investor can apply to the Department of Economic Development (DED) and fulfill all legal requirements and pay fees for issuing the business licence. The licences issued by various licensing authorities in Abu Dhabi include: Commercial, Agricultural, Vocational, Professional, Industrial and Tourism.
• Issuing Business Licence – Having obtained the approval of the relevant authorities, if any, the investor can apply to the Department of Economic Development (DED) and fulfill all legal requirements and pay fees for issuing the business licence. The licences issued by various licensing authorities in Abu Dhabi include: Commercial, Agricultural, Vocational, Professional, Industrial and Tourism.

Twofour54 Free Zone

‘twofour54’ is a media-based Free Zone in Abu Dhabi, located near to central Abu Dhabi, the international airport and Yas Island. Named after the geographical co-ordinates of Abu Dhabi (24° North, 54° East) it offers competitive economic benefits for companies such as simple licensing and business set-up services, and 100% company ownership in a stable environment.

Abu Dhabi Global Market SPV

The Abu Dhabi Global Markets (ADGM) financial free zone has created a flexible, robust, simple and efficient Special Purpose Vehicle (SPV) regime that caters to a broad range of business types, uses and industry sectors including but not limited to aviation financing and leasing, corporates, sovereign wealth funds, single family offices, trustees and individual investors.

ADGM Free Zone

The Abu Dhabi Global Market (ADGM) is a financial free zone located in the heart of Abu Dhabi. ADGM occupies the whole of Al Maryah Island and has been designated the financial centre of Abu Dhabi, with its own civil and commercial laws. Established by Federal Decree in 2013, the ADGM is a key pillar of Abu Dhabi’s Economic Vision, designed to act as a catalyst for the growth of a dynamic financial services sector in the UAE.

Masdar City Free Zone

Masdar City, the flagship project of Abu Dhabi Future Energy Company (Masdar), operates as a special economic zone with a focus on clean technology and renewable energy. It was developed with the vision of transforming Abu Dhabi into “the pre-eminent source of renewable energy, knowledge, development, implementation and the world’s benchmark for sustainable development.”

Abu Dhabi Airport Freezone (ADAFZ)

Established in 2006, the Abu Dhabi Airport Freezone was envisioned as a catalyst for economic diversification and growth in the emirate. It is strategically located adjacent to Abu Dhabi International Airport, providing seamless connectivity to global markets. Over the years, ADAFZ has evolved into a bustling business hub, attracting companies from a wide range of industries, from aerospace and aviation to logistics and technology.

Khalifa Industrial Zone Abu Dhabi

Khalifa Industrial Zone Abu Dhabi, also referred to as KIZAD, strategically occupies a prime location nestled between Abu Dhabi and Dubai. This strategic positioning offers seamless connectivity to major seaports, airports, and global transportation networks. The close proximity to Khalifa Port and Abu Dhabi International Airport significantly enhances the logistics and trade prospects.

KIZAD is recognized as one of the largest freezones globally, covering a sprawling 417 square-kilometer expanse strategically positioned halfway between Abu Dhabi and Dubai. KIZAD is further divided into two distinct areas: Area A, primarily catering to businesses in the industrial sector, and Area B, where commerce-based companies flourish. KIZAD accommodates both free zone and non-free zone-based companies.

Corporate Shareholder Model

If your business in Abu Dhabi requires you to trade on the UAE mainland with local companies then you will need a Department of Economic Development (DED)-licensed company. Under the UAE Commercial Companies Law, any ‘onshore’ company must be at least 51% owned by UAE nationals or entities owned by UAE nationals. Many investors are concerned by these foreign ownership restrictions and are uncomfortable about relinquishing control of their company to a local partner.