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ABU DHABI FREE ZONE COMPANY FORMATION
When starting a new company in Abu Dhabi, the owner must decide if they want to do business in the Abu Dhabi free zone (also known as “offshore”) or on the mainland (also known as “onshore”).
Abu Dhabi Has multiple free zones encouraging foreign investors to do business there.
A free zone is a specific region of land regulated by a set of commercial and economic incentives different from those usually provided by the country in which the zone is located. A free zone’s objectives are to assist in the growth of a company or industrial cluster, attract foreign investment, increase employment, foster trade, and expand the economy.
The Abu Dhabi Economic Vision 2030 plan, which was released in November 2008, includes the free zones as part of its strategy to foster long-term economic growth in Abu Dhabi and build a sustainable economy.
WHAT IS THE DIFFERENCE BETWEEN MAINLAND (ONSHORE)AND FREE ZONE (OFFSHORE)
- Rules and Regulations – The licensing body and corporate regulator for businesses in the UAE’s seven Emirates is the Department of Economic Development or an analogous organization. All free zones, however, are created by decree, which also establishes the business regulator and licensing body for the free zone. Additionally, each free zone has its own set of licensing requirements for businesses.
- Area Approved for Business Activities – Companies licensed in a free zone are strictly prohibited from engaging in commercial activity on the UAE mainland. In reality, however, some operations can be carried out by free zone businesses there. Local DEDs and free zones have recently collaborated and supported the idea of “dual licensing.” Businesses registered in a free zone may be granted permission to conduct business on the Emirate’s mainland with a dual license. This is given on a case-by-case basis and is subject to the appropriate authorities approving it.
- Foreign Ownership – Establishing a business in the free zones permits foreign nationals to own up to 100% of businesses formed there. Federal Decree-Law No. 19 of 2018 on Foreign Direct Investment (the “FDI Law”) was released by the UAE Cabinet to increase foreign direct investment in the country. The Foreign Direct Investment (FDI) Law allows limited liability companies that wish to conduct business on the mainland to have up to 100% foreign ownership as long as they meet two requirements: (1) their desired business activities must be included in a specific “positive list” that the Cabinet has issued, and (2) their companies must meet certain investment thresholds.
FREE ZONES IN ABU DHABI
- Abu Dhabi Airport Free Zone (ADAFZ)
The Abu Dhabi International Airport and the Abu Dhabi Airport Free Zone, or ADAFZ, are located close to one another. Skycity, a subsidiary of Abu Dhabi Airports Company (ADAC), created it. The aviation, aerospace, airport services, logistics, cargo, and freight industries are the primary focus of ADAFZ. ADAFZ offers a range of amenities and infrastructure, such as warehouse units, development plots, commercial offices, and logistical services.
- Twofour54 Abu Dhabi
Abu Dhabi’s Twofour54 media free zone offers top-notch facilities and fully integrated support services to companies in the creative industries. The Media Zone Authority (MZA) established it in order to promote Abu Dhabi as a major force in the production of Arabic media content.
Well-known media organizations operating operations in Twofour54 Abu Dhabi include the BBC, CNN, Financial Times, and Thomson Reuters Foundation, etc.
Founded in 2006, Masdar City is situated close to Abu Dhabi International Airport. The Abu Dhabi government and Abu Dhabi Future Energy Company, a subsidiary of Mubadala Development Company, have partnered to improve the region’s energy efficiency. Being dependent on renewable energy sources, it is a fast-growing worldwide hub for clean technologies.
Masdar City, a premier initiative of Abu Dhabi Future Energy Company, gives clean energy startups a specialized area to test, showcase, improve, develop, and market their products while also giving them access to all the advantages of free zones.
- Abu Dhabi Global Market (ADGM)
The Abu Dhabi Global Market is an international financial center (IFC) located in the nation’s capital that opened for business on October 21, 2015. For businesses in the financial industry, particularly those engaged in asset management, wealth management, and private banking, it is the perfect free zone.
The Registration Authority, the Financial Services Regulatory Authority, and the ADGM Courts are the three autonomous authorities that make up ADGM. Every one of these authorities makes it possible for businesses and registered financial institutions to grow and function under an international Common Law regulatory framework.
Khalifa Industrial Zone Abu Dhabi (KIZAD), a subsidiary of Abu Dhabi Ports, is renowned as the center for integrated trade, logistics, and industrial activities. Situated in the Al Taweela region, halfway between Abu Dhabi and Dubai, KIZAD is closely connected to Khalifa Port, one of the most advanced deep-water ports in the entire world.
KIZAD provides assistance for all types of commercial endeavors, including production, transportation, commerce, and distribution. This free zone’s location, cheap operating costs, and customized business amenities are advantageous to businesses that operate there.
Abu Dhabi Industrial City, also known as the Industrial City of Abu Dhabi, is an industrial economic zone that offers infrastructure and support for companies involved in engineering, construction materials, oil and gas, and other related sectors. It is run by ZonesCorp, which is in charge of Al Ain Industrial City and is the biggest operator of industrial zones in the United Arab Emirates.
- Higher Corporation for Specialized Economic Zones (ZonesCorp)
This Abu Dhabi free zone is home to more than 600 of the biggest and most well-known multinational corporations in the world across a variety of industries. Established in 2004, the Higher Corporation for Specialized Economic Zones (ZonesCorp) intends to create industrial cities around Abu Dhabi.
The free zone has attracted a great amount of foreign direct investment and contributed significantly to the industrial growth of the Emirate.
The ZonesCorp is less than an hour’s drive from four ports in Abu Dhabi such as the ports of Jebel Ali, Khalifa, Zayed, and Mussaffah. The zones also provide access to two of Abu Dhabi’s and two more of Dubai’s top-tier international airports.
ZonesCorp produces chemicals, food and drink, oil and gas, building materials, engineering and metals, leather and textile products, product assembly, wood and paper products, and fiberglass and plastic products.
HOW TO FORM A FREE ZONE BUSINESS IN ABU DHABI
- Deciding the business activity – The rules and regulations relevant to each company activity will differ. Depending on the selected business activity, our team at Relin Consultants will advise the most suitable Free Zone.
- Registering the trade name – It is necessary to register the trade name of their business. A list of possible names can be sent to the respective Free Zone authorities for approval. The name must be authorized and formally registered by the authorities if the existing business hasn’t already done so in the United Arab Emirates.
The following guidelines must be followed:
- Must be followed by the company’s legal structure, such as FZE, LLC, DMCC, etc.
- Does not violate national morals or public order.
- It must not include the names of any governing bodies, logos, religions, or foreign organizations.
- There are no other companies that have registered the same trade name.
- It is appropriate considering the legal circumstances and the necessary course of action.
- Selecting a workspace within the Abu Dhabi Free Zone
Throughout the Abu Dhabi Free Zone company formation procedure, dedicated office space is needed. In the Abu Dhabi Free Zone, office space is available for purchase or lease.
The requirements for office space are determined by the number of employees in a company as well as the type of business activity selected. Permits are given according to the number of office spaces used in the United Arab Emirates or its free zones. We advise that the applicant should buy multiple licenses if their workplace area is significantly larger.
- Obtaining business licenses
Once the business name is approved and registered, our team will assist the applicant in getting approval for the issuing of the business license. Industrial license, Manufacturing license, Media license, Offshore license, Warehousing license, Commercial or trade license, Consultancy or services license, E-commerce license Abu Dhabi, Educational license, and Freelancer license are the available licenses depending on the business activities.
- Obtaining approvals
After getting the initial approval, our team will assist the applicant in proceeding with the company registration and license fee payment. The cost of obtaining a license differs depending on the type of license.
The following documents are required for registering a company in the free zone –
- A written and verified board resolution naming the management or director of the new business.
- A passport-sized photo of the directors or management of the new business on a white backdrop.
- Information on share capital.
- A power of attorney provided to the board or management of the new company
- Sample signatures on the articles of association and memorandum (notarized and attested) from the directors or management of the newly established firm
TYPES OF LEGAL ENTITIES AVAILABLE IN THE ABU DHABI FREE ZONE
- Limited Liability Company in the Free Zone – An independent legal entity, a Limited Liability Company (LLC) may have one or more individual shareholders, corporate shareholders, or a mixture of the two. The kind of economic activity determines the minimal capital needed.
- Branch of a Foreign Company – A foreign firm may continue its primary activity or business in the UAE or open an office or branch on obtaining a license from the Ministry of Economy and Commerce, with the exception of international firms licensed to operate from a free zone in the country.
- Branch of a UAE Company – A UAE-based business may also establish a branch in free zones, mainland or offshore.
- Freelance License – A freelance permit is given to independent contractors, designating them as sole practitioners and allowing them to operate under their real name rather than a trademark.
Reach out to us at Relin Consultants – Leading Global Business Set Up Partners for further assistance with your Abu Dhabi Free Zone business establishments.
What kind of entities are eligible for registration in the free zone?
An entity must be a Free Zone Limited Liability firm (LLC), a branch of a foreign or UAE firm, or freelancers with a freelancing permit in order to register in an Abu Dhabi free zone.
Can a foreigner own a company in the free zone?
In a free zone, foreign residents are able to fully own a firm without having a partnership with a UAE national.
What is the price to set up a business in the Abu Dhabi free zones?
The free zone in which a firm is established and the type of business license obtained determine the cost of the Abu Dhabi free zone license.
What is the time limit for incorporating a business in the Abu Dhabi Free Zone?
Depending on the kind of business and the particular free zone chosen, the process of forming a company in an Abu Dhabi free zone often takes 2-4 weeks. However, the process can take longer if there are any delays in the required paperwork or approvals.
After receiving a license for an Abu Dhabi Free Zone firm, can I change the nature of my business activity?
It is possible to alter a commercial activity after obtaining a license in one of Abu Dhabi’s free zones; however, the procedure and requirements vary depending on the free zone and the specific activity that has to be added or altered.