Choosing a business activity
Company formation knowledge series
Issue 01 – Choosing a business activity
In the UAE there are 2 types of jurisdictions to set up a company in, Mainland on one hand and more than 45 free zones located in the 7 emirates, with the majority of these free zones in Dubai. When setting up a company in the UAE, whether a mainland or a free zone company, the first step is to select the business activity. Knowing the business activity before starting any company formation procedures is a must to identify the company legal form available options, whether to setup in a free zone or mainland jurisdiction, and accordingly the different parties associated with this incorporation.
Some activities can be practiced under an umbrella of one of the many free zones in the country, while other activities can only be practiced in the mainland due to its nature, and should be regulated by the Department of Economic Development in the case of Dubai, besides other governmental bodies in some cases as in Oil and Gas or financial related activities for example.
There are around 2,100 business activities categorized and classified into the following categories: Commercial, Professional, Industrial, Agricultural and Tourism. The company license follows the same classification as the business activity. In most cases a license cannot combine activities from different groups, with the exception of some cases and after the approval of the authority, and in this case the license type will follow the largest group of activities or the activity which has more weight. for example if a license contains an industrial activity and a professional activity, then the license will be categorized according to the Industrial activity and will be considered an industrial license in this case.
In the next issues we will cover other topics related to company formation in the UAE so keep following us to receive the latest topics and update on company setup related information.