The UAE has reshaped its investment landscape by allowing foreign investors to wholly own mainland companies in most sectors, removing the previous general requirement for a local sponsor or service agent. This change appeals to entrepreneurs, established regional businesses and multinational groups that want direct control, onshore presence and access to the wider UAE market rather than operating only through free zones or nominee arrangements.
In this guide, you will discover how the Commercial Companies Law was amended to enable 100% foreign ownership, what “no local sponsor” actually means today, how to choose your activity and legal form, and how to complete the licensing process through the relevantDepartment of Economic Development (DED) or equivalent. You will also find an overview of post‑licensing obligations, including labour registration with the Ministry of Human Resources and Emiratisation (MOHRE), investor and employee residence via the General Directorate of Residency and Foreign Affairs (GDRFA)/the Federal Authority for Identity, Citizenship, Customs and Port Security (ICP)—also, corporate tax and Economic Substance Regulations, plus practical notes on sector approvals and intellectual property.
Legal Basis For Mainland Business Without A Local Sponsor
The starting point for understanding mainland business setup without a local sponsor is the UAE’s Commercial Companies Law and the reforms introduced in 2020. These reforms were designed to facilitate investment and enhance competitiveness while preserving the state’s ability to regulate activities with a strategic impact. As a result, most standard commercial activities can now be carried out on the mainland by wholly foreign-owned companies.
Commercial Companies Law And 100% Foreign Ownership
Federal Decree‑Law No. (2) of 2015 on Commercial Companies, as amended by Federal Law No. (26) of 2020, which governs company formation and foreign ownership on the UAE mainland. According to guidance published by the Ministry of Economy, the 2020 amendments allow investors of all nationalities to establish and fully own mainland companies in permitted sectors. Full foreign ownership does not apply to all activities; certain strategic or restricted sectors—such as defence, energy, telecommunications, oil and gas, nuclear activities and security-related services—continue to require UAE participation under the applicable federal and emirate-level lists.
The Ministry of Economy explains that full foreign ownership is available across all legal structures mentioned in the Commercial Companies Law, including public joint stock companies, private joint stock companies, limited liability companies, limited partnership companies and partnership companies, provided the underlying activities are permitted. This means that a UAE mainland LLC can now typically be 100% foreign‑owned, as can many other forms, provided they do not fall within specific restricted or strategic categories determined at the federal and emirate level.
The amendments also address the position of foreign companies operating through branches in the UAE. Under the updated rules, a foreign company opening a branch and practising its activities in the UAE is no longer required to appoint a UAE national service agent. Instead, the branch can operate directly once it satisfies licensing and regulatory requirements, reinforcing the broader policy of enabling direct foreign participation in the onshore economy.
Strategic Activities And Emirate‑Level Competence
Although the new regime is liberal, it is not entirely without limitations. The Ministry of Economy notes that companies and investors of various nationalities may obtain full ownership in all economic sectors, including industry, agriculture and services, except for certain activities designated as having a “strategic impact”. These activities are determined under federal decisions, and competent authorities can set conditions such as specific national participation or special licensing frameworks.
Implementation of foreign ownership rules is carried out at the emirate level. Each emirate’s competent local authority – typically the Department of Economic Development (DED) or its equivalent – decides which activities in its jurisdiction are eligible for 100% foreign ownership, subject to the federal list of strategic impact activities. In practice, this means you must check the activity list and ownership matrix issued by the relevant emirate when planning your business, even though the overarching federal framework is the same.
Branches of foreign companies also benefit from these reforms. The Ministry of Economy confirms that a foreign branch is no longer required to appoint a UAE national service agent. However, it remains fully subject to the same activity‑based and sectoral regulations as any other mainland entity. Investors should always consider the Commercial Companies Law and any specific sector rules that may apply in their chosen emirate and industry.
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What “No Local Sponsor” Means On The UAE Mainland Today
The phrase “mainland business setup without local sponsor” is widely used in the market, but its legal meaning has changed over time. Understanding this change will help you structure your UAE presence correctly and avoid outdated assumptions about obligatory local shareholders or service agents.
From Mandatory Sponsor To Direct Foreign Ownership
Before the 2020 amendments, foreign investors typically needed a UAE national shareholder holding at least 51% in many mainland limited liability companies, or a UAE national service agent for specific professional licences and branches. These arrangements were often referred to as “local sponsorship” or “local service agent” arrangements, regardless of the economic reality of control and profit sharing agreed between the parties.
Following the reforms described by the Ministry of Economy, the Commercial Companies Law now permits investors of all nationalities to own 100% of many mainland companies across a wide range of activities. For most non‑strategic sectors, there is no longer a legal requirement for a UAE national shareholder or service agent. In current practice, “without local sponsor” therefore means that, in eligible activities, the foreign investor can appear as the sole shareholder in the commercial register and does not need a UAE national to meet formal shareholding or agency requirements.
The key caveat is that this remains subject to activity‑level and emirate‑level rules. If an activity is classified as having a strategic impact or is otherwise restricted, the competent authority may require UAE participation or impose specific conditions. Investors should therefore treat “no local sponsor” as an opportunity created by law, not an absolute right irrespective of activity.
Mainland Vs Free Zone: Control And Tax Considerations
Onshore (mainland) companies are licensed primarily by emirate‑level economic departments, whereas each free zone authority licenses free zone companies. Both are subject to federal laws such as the Commercial Companies Law (to varying extents) and the federal Corporate Tax regime. From a control standpoint, the post‑2020 framework means that a foreign investor can generally achieve full ownership and direct management of a mainland company, similar to what is usually available in free zones, without the traditional local sponsor structure.
From a tax perspective, the UAE Corporate Tax applies to businesses and individuals conducting business activities under a commercial licence in all emirates, including mainland companies. According to the Federal Tax Authority’s Corporate Tax general guide, standard businesses are subject to Corporate Tax at 0% on taxable income up to AED 375,000 and 9% on taxable income above AED 375,000. Free zone businesses may access specific Corporate Tax incentives, but these incentives are conditional and do not apply by default to mainland entities. In other words, you should assume the standard Corporate Tax rules apply to your mainland business unless you clearly meet any special conditions set out in the legislation and FTA guidance.
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Choosing Activity, Legal Form And Licence Type
Before you register a company or reserve a name, you must decide precisely what your business will do. In the UAE framework, economic activity drives almost every other decision: which authority licenses you, whether 100% foreign ownership is available, which legal forms you may adopt, and which additional approvals you might need.
Start With Your Economic Activity
Federal guidance from the Ministry of Economy identifies “choose the economic activity” as the first step in establishing a business on the mainland. This is because activity classification determines which authorities are involved, which legal structures are permitted and whether your activity falls within any strategic or restricted categories. For example, a healthcare activity may require approvals from health regulators in addition to the DED. In contrast, a general trading activity will mainly interact with the DED and customs‑related authorities.
The Ministry of Economy notes that more than 2,000 different economic activities are available for licensing in the UAE. Each emirate’s DED or equivalent publishes its own activity list aligned with these federal categories. When planning a mainland business setup without a local sponsor, you should identify the closest matching activity description and verify, with the competent emirate authority, whether 100% foreign ownership is allowed for that activity and what supporting documents are expected.
Recognised Legal Forms For Mainland Companies
Once you have selected your activity, you can consider the appropriate legal form. According to the Ministry of Economy’s guidance on establishing a business, recognised main legal forms for mainland entities include partnership, limited partnership, Limited Liability Company (LLC), public joint stock company, private joint stock company and branch of a foreign company. Each form has its own capital, governance and disclosure requirements, and not all forms are available for every activity.
The Ministry of Economy further clarifies that the selected legal form must be compatible with the chosen business activity as per each emirate’s Department of Economic Development requirements. For example, some regulated professional services might be more suited to particular structures, while industrial ventures may need forms that allow for larger capital and multiple investors. Importantly for foreign investors, the Commercial Companies Law does not require a partner or manager of a limited liability company in the UAE to be a UAE resident, which offers flexibility in appointing international management while remaining compliant.
Licence Categories On The Mainland
In addition to legal form, you must choose the licence category that best reflects your planned operations. The Ministry of Economy lists several main licence types for mainland entities, including industrial, commercial, crafts, tourism, agricultural and professional licences. Each category is linked to specific families of activities and may involve specialised regulatory oversight.
A simplified overview is as follows:
| Licence Category | Typical Focus (Illustrative) |
|---|---|
| Industrial | Manufacturing, processing and industrial production |
| Commercial | Trading, retail, wholesale, import/export |
| Professional | Services based on professional skills or expertise |
| Tourism | Travel, hospitality and tourism‑related services |
| Agricultural | Farming, cultivation and related activities |
| Crafts | Artisanal, small‑scale production and craft‑based work |
The licence category can influence whether additional approvals are required from sector regulators. For example, tourism licences may involve coordination with tourism authorities, and healthcare‑related activities may require health‑sector approvals. It may also be relevant for immigration, as investor and partner residence categories often refer to the type of economic licence and the share capital invested.
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Step‑By‑Step: Setting Up A UAE Mainland Company Without A Local Sponsor
You can move through the procedural steps of establishing a mainland company with the legal framework and structural choices in mind. While each emirate has its own systems and formats, the core sequence described by the Ministry of Economy is consistent across the UAE.
Use Official Portals (Example: Invest In Dubai)
Emirate‑level Departments of Economic Development are the primary regulators for mainland licensing. In Dubai, the official “Invest in Dubai” portal is a central online platform that enables investors to start a business, check legal types, select activities, reserve a business name and apply for a new licence.
Through the Invest in Dubai portal, investors can view a startup checklist, browse business activities, check available legal structures, view licence packages, reserve a trade name (typically for 30 days) and submit a new licence application online. Similar online or hybrid systems exist in other emirates, and investors are encouraged to use these official portals or counters rather than informal intermediaries, to ensure that their mainland business setup without a local sponsor complies with current rules.
Core Licensing Steps (All Emirates)
Based on the Ministry of Economy’s “Establishing Business in the UAE” guidance, the core procedural steps to set up a mainland company are as follows:
| Step | Key Action (All Emirates – High Level) |
|---|---|
| 1 | Choose the economic activity |
| 2 | Choose the legal form compatible with that activity |
| 3 | Register a trade name with the competent economic department |
| 4 | Obtain initial approvals where required (e.g. from sector authorities) |
| 5 | Sign constitutional documents (e.g. memorandum of association) |
| 6 | Secure business premises and tenancy or use‑of‑premises documentation |
| 7 | Obtain the economic/trade licence from the emirate’s DED or equivalent |
After you choose the activity and legal form, you submit trade name options to the DED or via an online portal such as Invest in Dubai. Once the name is reserved, you may be required to obtain initial approvals, particularly where your activity touches regulated sectors such as health, real estate, education, transport or financial services. The Abu Dhabi investor guide and other official materials note that some activities require additional approvals or no‑objection certificates from specialised authorities in addition to the economic department’s licence.
Next, you sign the constitutional documents appropriate for your legal form. For LLCs, this typically includes a memorandum of association specifying shareholders, capital, profit distribution and management powers. You then secure suitable business premises, because the DED usually requires proof of an address in the emirate before issuing the licence. Once all documentation and approvals are in place, the economic department issues the trade or economic licence, formally creating your mainland company.
Ownership And Governance Documents
For companies benefiting from 100% foreign ownership, ownership and governance documents should accurately reflect the foreign investor’s full shareholding, subject only to any national participation required where an activity is classified as strategic under Cabinet guidelines or local rules. The Ministry of Economy confirms that investors may own and manage companies engaged in strategic activities if they comply with these specific licensing guidelines and any participation conditions set by competent authorities.
Your memorandum of association, partnership agreement or equivalent document should clearly set out the share capital, shareholding structure, powers of managers and directors, profit distribution, decision‑making processes and dispute‑resolution mechanisms. These documents are relied upon not only for licensing, but also by immigration authorities when assessing investor visas, by banks when opening accounts, and by the Federal Tax Authority when registering for Corporate Tax. Precise drafting reduces the risk of misunderstandings and supports smooth interaction with multiple regulators as your business grows.
After Licensing: Labour Registration, Visas And Tax Compliance
Securing the trade licence is a significant milestone. However, several critical steps follow before you can fully operate: labour registration with the Ministry of Human Resources and Emiratisation (MOHRE), obtaining residence permits for investors and staff, and ensuring Corporate Tax and Economic Substance compliance.
MOHRE Establishment Card And Work Permits
For labour and work permit purposes, a newly licensed mainland company must register with the MOHRE and obtain an Establishment Card. The MOHRE’s official service description explains that the Establishment Card requires a valid trade licence and submission of establishment details, including owners, authorised signatories, specimen signatures, business activity and location.
The MOHRE further notes that owners, partners, service agents and authorised signatories must hold a MOHRE‑issued personal identification number before an Establishment Card is issued. Once the Establishment Card is in place, the company can apply for work permits and labour contracts for employees through the MOHRE’s channels. For a mainland business setup without a local sponsor, this step ensures that you can legally employ staff directly under your own company rather than relying on third‑party staffing arrangements.
Residence For Investors, Partners And Staff
In Dubai, the General Directorate of Residency and Foreigners Affairs (GDRFA) issues a Green Residence permit (partner/investor) for up to five years without requiring an employer or guarantor, subject to eligibility criteria. According to the GDRFA, investors and partners must present a passport valid for at least six months, a personal photograph, the partner/memorandum of association or investment contract, and a valid trade licence. The guidance also refers to minimum paid share capital thresholds. For example, an investment share of at least AED 1 million for specified legal forms, though investors should always check the current thresholds and conditions on the official portal before applying.
Dubai also offers long‑term Golden Residence options. The GDRFA’s published criteria state that Golden Residence (investor/public investments) is generally valid for 10 years, renewable without a traditional sponsor, where minimum investment value conditions are met (for example, total investments of at least AED 2 million for company investors, as noted by the GDRFA). These documents must be supported by certified financial reports, a valid trade licence, company bank statements and tax registration.
A Golden Residence (entrepreneurs) category is also available for qualifying entrepreneurs with approved innovative or technology‑based projects, usually based on nomination by competent bodies such as the Dubai Future Authority. In addition, a specific visit visa exists to explore business opportunities in Dubai without requiring a sponsor or host in the UAE, available as a single or multiple‑entry visa through the GDRFA.
For day‑to‑day residence, the company itself generally acts as the sponsor for the owner’s and employees’ residence visas, once the trade licence and the MOHRE Establishment Card are in place. After the investor or partner obtains residence, they may, in turn, sponsor eligible family members, subject to the usual requirements.
At the federal level, the UAE’s Golden Visa system, administered by the Federal Authority for Identity, Citizenship, Customs and Port Security (ICP), provides 5‑ or 10‑year residence permits to qualifying investors, entrepreneurs and specialised talents without a traditional sponsor, with automatic renewal if conditions remain met, supporting long‑term business continuity.
Corporate Tax And Economic Substance
The UAE’s Corporate Tax regime applies to businesses and individuals conducting business activities under a commercial licence in all emirates, including mainland companies. Corporate Tax applies to tax periods starting on or after 1 June 2023. The Federal Tax Authority’s Corporate Tax general guide explains that standard mainland businesses are subject to Corporate Tax at 0% on taxable income up to AED 375,000 and 9% on taxable income exceeding that threshold.
Resident juridical persons such as LLCs and other mainland entities must comply with Corporate Tax registration and filing obligations as set out in the FTA guidance. The FTA’s registration guide states that taxable persons are required to file a tax return and pay any due tax within nine months after the end of the relevant tax period. The FTA is responsible for the administration, collection and enforcement of federal taxes and has conducted public awareness campaigns across all emirates to explain Corporate Tax obligations.
Separately, the UAE’s Economic Substance Regulations (ESR) apply to certain mainland and free zone businesses that carry out “relevant activities”, as defined in ESR guidance on the FTA website. Where ESR applies, entities must demonstrate adequate substance in the UAE and file ESR notifications and, where required, economic substance reports. While not every mainland company will fall within ESR’s scope, investors should review their activities and group structure against the ESR criteria to determine their obligations.
Compliance, Sector Approvals And Intellectual Property
Beyond the core licensing, labour, immigration and tax steps, ongoing compliance with sector‑specific regulations and intellectual property protection is essential for sustainable operations. These aspects can significantly affect the cost and timeline of a mainland business setup without a local sponsor.
Sector‑Specific Regulation And Approvals
The Ministry of Economy highlights that mainland companies must comply with applicable sectoral regulations in addition to commercial licensing rules. Activities in areas such as health, transport, real estate, education, financial services or tourism may require additional approvals, permits or inspections from specialised authorities before or after licence issuance. For example, a health clinic will interact with health regulators, and a real estate brokerage may require approvals from real estate regulatory agencies.
Some activities are designated as strategic and fall under licensing frameworks that may require UAE participation or specific conditions. Typical examples include oil and gas–related services, defence-linked activities, security services and certain types of telecommunications or transport operations. In these cases, foreign investors cannot assume automatic 100% ownership; approvals from the competent authorities and compliance with any participation requirements are necessary. Investors should review the relevant emirate-level activity lists and secure the required written approvals or no-objection certificates before proceeding.
Protecting Intellectual Property And Using Official Portals
If your mainland company creates intellectual property—such as software, creative content, or other original works—you may wish to register those rights in the UAE. Different types of intellectual property are registered with different authorities. Trademarks are registered with the Ministry of Economy, while copyrights and related rights are handled by the UAE Ministry of Culture and Youth.
Registering intellectual property with the competent authority can support enforcement in the event of infringement and strengthen the company’s asset base when raising investment or entering partnerships.
FAQ: Mainland Business Setup Without Local Sponsor
How Do I Open A Mainland Company In The UAE Without A Local Sponsor?
You start by selecting your economic activity and checking, with the relevant emirate’s DED or equivalent, that 100% foreign ownership is allowed for that activity. Then you choose a compatible legal form (commonly an LLC), reserve a trade name, obtain any necessary initial approvals, sign your memorandum of association or partnership agreement, secure business premises and apply for the mainland trade licence. If your activity is not on the strategic impact list and the local rules permit full foreign ownership, your company can be incorporated with only foreign shareholders, without a UAE national sponsor or service agent.
Does The UAE Mainland Still Require A Local Sponsor For Any Activities?
The general requirement for a UAE national sponsor or shareholder has been removed for most activities under the Commercial Companies Law as amended in 2020. However, activities designated as having a strategic impact may still be subject to specific conditions, including possible national participation, as determined by Cabinet decisions and implemented by each emirate’s competent authority. You should always review the activity list and ownership rules issued by the relevant DED to confirm whether your activity is fully open to 100% foreign ownership.
What Are The Steps To Set Up A Dubai Mainland Company 100% Foreign Owned?
In Dubai, you can use the official Invest in Dubai portal to complete most steps online. The typical sequence is to choose your activity, select an appropriate legal form, check that 100% foreign ownership is allowed, reserve your trade name, obtain any initial approvals needed from specialised regulators, sign constitutional documents such as the memorandum of association, arrange for office or shop premises and submit your licence application. Once the Dubai economic department issues the licence, you can proceed to the MOHRE registration, investor and employee residence applications and Corporate Tax registration where required.
Which Activities Allow 100% Foreign Ownership In the UAE Mainland?
Under UAE law, 100% foreign ownership may be permitted across a wide range of economic activities, including industry, agriculture, and services. However, this is not automatic and does not apply to activities classified as having a strategic impact. Whether full foreign ownership is allowed for a specific activity depends on approval by the competent local authority in the relevant emirate, acting within the federal framework. Each emirate issues its own list of permitted activities and may impose additional conditions or restrictions. Applicants should therefore review the activity list published by the DED or the equivalent authority in the emirate of operation to confirm eligibility and any applicable requirements.
What Legal Forms Are Available For A 100% Foreign-Owned UAE Mainland LLC?
The Commercial Companies Law allows foreign investors to own 100% of various legal forms, including limited liability companies, subject to activity‑based rules. For an LLC, the Ministry of Economy confirms that partners and managers are not required to be UAE residents. The LLC’s memorandum of association must state the foreign shareholder(s) as owning 100% of the capital if the activity is eligible for full foreign ownership. Other recognised forms include partnerships, limited partnerships, private and public joint stock companies and branches of foreign companies, each with its own suitability depending on your activity and investment structure.
What Are The UAE Mainland Business Licence Requirements?
Mainland business licence requirements vary by emirate and activity, but generally include selecting a recognised activity, choosing a compatible legal form, reserving and registering a trade name, obtaining any initial approvals from specialised authorities, signing constitutional documents (for example, a Memorandum of Association for an LLC), securing business premises and submitting all documentation to the DED or equivalent. Some activities may require ongoing approvals, inspections or professional qualifications. You should review the detailed requirements on the relevant emirate’s official portal or service centre.
How Does Corporate Tax Apply To UAE Mainland Companies?
Corporate Tax applies to businesses and individuals conducting activities under a commercial licence in all emirates, including mainland companies. According to official guidance, taxable income up to AED 375,000 is subject to Corporate Tax at 0%, and taxable income above that threshold is taxed at 9%. Resident juridical persons such as LLCs must register with the Federal Tax Authority, keep proper accounting records and file a tax return, paying any due tax, within nine months after the end of each tax period. Free zone incentives do not automatically apply to mainland companies.
Do I Need A MOHRE Establishment Card For A New Mainland Business?
Yes. A mainland company that intends to employ staff must register with the Ministry of Human Resources and Emiratisation (MOHRE) and obtain an Establishment Card. To do this, you need a valid trade licence and must register establishment details, including owners and authorised signatories, who must each have a MOHRE personal identification number. Once the Establishment Card is issued, your company can sponsor work permits and labour contracts for employees through the MOHRE systems.
What Are The Investor Green Residence Visa Requirements In Dubai?
GDRFA Dubai provides a Green Residence permit for partners and investors for up to five years without the need for an employer or guarantor, subject to meeting defined conditions. These include a passport with at least six months’ validity, a personal photograph, a partner or memorandum of association or investment contract, a valid trade licence and minimum paid share capital thresholds such as an investment share of at least AED 1 million for specified company types. As requirements may evolve, investors should always confirm the latest criteria directly on the GDRFA portal before applying.
Can Mainland Company Owners Obtain A Golden Visa?
Yes, subject to meeting the applicable conditions. The GDRFA and ICP outline various Golden Residence categories, including investors in companies or public investments and qualifying entrepreneurs. For example, investors in companies may need to demonstrate total assets of at least AED 2 million, provide certified financial reports, maintain a valid trade licence, provide company bank statements and show tax registration. Golden Visas are generally valid for 10 years and renewable without a traditional sponsor if conditions remain satisfied, facilitating long‑term business continuity for qualifying mainland company owners.
Are ESR Requirements Applicable To UAE Mainland Businesses?
Economic Substance Regulations apply to both mainland and free zone entities that conduct specified “relevant activities” as defined by the ESR framework. If your mainland company is engaged in any of those activities, you may need to file an ESR notification and, if you meet additional criteria, a full economic substance report, demonstrating adequate substance in the UAE. The Federal Tax Authority’s ESR section provides detailed guidance on which activities are in scope and how the tests are applied, so you should assess your business against those criteria.
Explained by
Shaimaa Sayed Qasem
Department of Dubai Economic Services at EGSH
Shaimaa Sayed Qasem is a dedicated service provider with the Department of Dubai Economic Services at EGSH, with seven years of experience delivering business services, supporting clients and ensuring compliance with regulatory requirements.
