After considering the rising interest of capitalist across the world, State Government of Dubai has taken several purposeful steps not only to provide plenty of business opportunities but also flexibility to establish commercial setups and enterprises easily. Formation of free economic zones in Dubai and UAE is an example of efforts made by State authorities. Currently, UAE possesses more than 22 free zones to facilitate international business startups. These zones possess more than 10,000 foreign companies. However being the business hub of UAE, Dubai houses the largest number of such setups.
Since the inception of this concept, it has been used internationally as a model to promote business and trade. The primary aim to set up FZ in Dubai is to attract genuine trading and successful export companies to inaugurate their setups in the city. These zones allow entrepreneurs to set up two main kinds of corporate entities called Freezone Company in Dubai and Freezone Company (FZCO or FZ-LLC). Traders are free to choose any kind of enterprise infrastructure according to their needs.
Free Zone firms are independent entities/ establishments owned by an individual shareholder, corporate shareholder or mixture of both whereas LLC is defined as an entity/group which is neither a sole ownership of a candidate nor a true corporation. Rather it essentially has two or more shareholders.
What are the key differences between the FZ & FZ-LLC?
• They can be primarily differentiated on the number of shareholders. FZ are the establishments with single shareholder (a person/a company) in contrast to those FZ-LLC companies are actually Limited Liability Companies with two or shareholders. Both of them have unique operating benefits. Share capital requirements for FZ-LLC totally depend on the zone in which it is located.
• Besides this, a FZ- corporation can be used to open a Branch of another firm because the branch is not new firm rather it’s an extension of a parent business. But branches that are located outside economic zones can never be called as FZE, FZCO or FZ-LLC.
• FZ-LLCs are the companies with 2-5 shareholders that are located in F zone. In addition to 100% ownership to foreign shareholders, it offers not only the flexibility to conduct business across the UAE but also on an international scale. The infrastructure supports a wide range of commercial, professional and industrial licenses.
Is there any difference in share capital?
Irrespective of their types FZ or FZ-LLC, all the enterprises open in free zones will need solvency to deposit share capital amount. They have to open a bank account in UAE licensed bank in the name of the new organization. Soon after the amount is deposited, a bank statement is then issued to show Free Zone Authorities to process enterprise setup process. Once the legal process of establishing a company is completed, the deposit is released and can be utilized or save for the future. Although initial amount may vary between zones and purpose of business, generally, the amount ranges from AED 50,000 to AED 300,000 (approximately USD $13,600 to $82,000) for the majority of the F zones across UAE.
Is it necessary to establish a standard office setup?
Similar to other setups, free-zone companies also require physical office within the premises of specific free zone area. Almost all zonal authorities offer hot-desk and virtual offices for enterprises that do not need a full fledge office setup.
Summary: These are the few key difference between the major company infrastructures of free zone companies in Dubai. To ensure maximum benefits choose them wisely.