How To Set Up a Free Zone Company With a Corporate Shareholder In The UAE

Establishing a free zone company in the UAE with corporate shareholders can help businesses looking to expand. The formation requires additional documentation and considerations compared to those with individual shareholders, but many benefits are attached. This guide discusses the requirements, processes, and considerations that must be considered for a smooth setup. 

Benefits of Having a Corporate Shareholder

More Trust: Global corporate shareholders bring more confidence and legitimacy to your name.

Easier Expansion: Free zones in the UAE make it simpler to do business and trade internationally.

Tax Easements: Some are tax-exempt and enjoy passing value on the corporate income.

Limited Liability: Decreases the risk to the parent company. 

How to Decide Which Free Zone Is Best

How close is it to your operations: This consideration applies to zones like JAFZA or RAKEZ, which best serve logistics or trading companies.

Industry-Specific Zones: A relevant zone according to your industry, such as DMCC and DIFC for commodities or financial services, respectively.

Organizational restrictions in budgeting: Shams and Creative City offer very economically priced zones.

Accessibility to banks: Options like Dubai Silicon Oasis (DSO) work efficiently to establish a business bank account for corporate shareholders very smoothly. 

Documents required

The documentation obliged usually varies; namely, there are more documents needed for a free zone company incorporating a corporate shareholder than an individual:

For the Parent Company (Corporate Shareholder):

1. Certificate of incorporation
2. Memorandum of association and articles of association
3. Board Resolution

• Authorizing the specific signatory of the setup.
• Note: Include the particular free zone in the resolution (For example, “Authorized to set up a company at DMCC” means you are referring to DMCC. “Authorized to set up at IFZA” indicates that you refer to IFZA).

4. Incumbency Certificate: Confirmation of company directors, shareholders, and legal standing.

5. Power of Attorney: For the authorized signatory. 

For Individual Representatives:

• Copies of passports of director/ signatory and manager.
• UAE visa plus Emirates ID, if applicable.

Specific Requirements:

1. UBO Declaration: Form to identify the ultimate beneficial owners.
2. Proof of Address: For parent companies and the authorized signatory.
3. Shareholder Register: If applicable.

Document Attestation Requirements:

All corporate documents must be:

• Attested by MOFA (Ministry of Foreign Affairs) and MOJ (Ministry of Justice) in the UAE.
• Arabic Translations: Legalized documents must include Arabic translations as required. 

Common Mistakes to Avoid

1. Faulty Resolution: In particular, further specification should be made of the free zone to avoid rejection.
2. Incomplete Attestation: A delay in registration can be caused by modification for improper attestation at MOFA or MOJ.
3. Working Against Free Zone Rules: Some free zones require working through registered agents, while others allow for direct applications.
4. Ignoring UBO Updates: Updating UBOs is crucial unless you don’t want your licenses to be annulled for not following suitability principles.  

Opening a Bank Account

For companies within the free zone and corporate shareholders, the bank account opening will entail tedious and detailed documentation to be provided.

Key Considerations:

Banks to Consider:

• Those more aware of corporate setups: Emirates NBD, Mashreq Bank, and ADCB.

Documents Required:

• Trade license, MOA, and AOA.
• Notarized and attested documents of the Parent Company.
• UBO declaration.
• The authorized signatory’s passport and Emirates ID. 

Visas for Managers and Employees

Manager Visa: This is required for an authorized manager of the company.

Employee Visas: Free zones have particular visa quotas designated depending on the type of commercial license and the size of the office.

What is a UBO and Why is that Important?

The UBO is the person who ultimately owns or controls a company. Hence, UAE rules and regulations require the declaration and periodic updating of the UBO information. Non-compliance entails a hefty civil fine. 

Step-by-Step Procedure to Establish a Free Zone Company with a Corporate Shareholder

1. Choose the Free Zone: Depending on your business activity, budget, and location preference.
2. Submit Initial Application: Supply all parent company and individual documents.
3. Legalize and Notarize Documents: Ensure documents are attested to by MOFA MOJ and translated into Arabic when required.
4. Draft Board Resolution: Include specific authorization for the setup in the zone.
5. Pay the Required Fees: Cover all licensing, registration, and attestation costs.
6. Issue Trade License: The Free Zone Authority will issue the trade license only upon approval.
7. Apply for Visas and Bank Accounts: Start applying for visas and open bank accounts for the manager and employees.

Costs Involved

Individual Shareholder vs. Corporate Shareholder

How Can RAS Corporate Advisors Help?

We help our clients with incorporated shareholder setups in a very professional manner. We do everything within the purview of our scope of work. 

Free Zone Selection: We recommend the best zone based on your business activity and project goals.

Document Preparation: We assist you with board resolutions, UBO declarations, and document attestation.

Compliance Support: We ensure all documents align with MOFA, MOJ, and free zone requirements.

Guide with Banking and Visa: We help ensure no delays.

Call to action

Want to set up a free zone company with a corporate shareholder? RAS Corporate Advisors shall make this process easy for you! Contact us today for specialized advice, tailor-made solutions, and end-to-end support to experience a hassle-free process.