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Limited Liability Company - LLC (Onshore/Mainland)

Free Zone Establishment, Free Zone Company - FZE, FZCO

What is the main source of law authorising this entity form?

Federal Law No. 32 of 2021 on Commercial Companies Law (the “ New UAE Commercial Companies Law”)

Give a brief summary of this entity form, including

Does the entity possess separate legal personality?

A limited liability company (LLC) has a separate legal entity.

(Maximum) period of existence

Period of existence will depend on the period agreed upon by the shareholders based on the Memorandum of Association of the LLC. Note that an LLC can exist for an indefinite period.

Governing document(s)

License of the LLC, notarised Memorandum of Association of the LLC.

Liability of incorporators / shareholders

The shareholders' liability is limited to the extent of their shares in the capital of the LLC.

(Governing) bodies

Governed by manager(s) or Board of Directors (to be provided in the Memorandum of Association).

Other particularities

Pursuant to the New UAE Commercial Companies Law, foreign ownership restrictions have been abolished in limited liability companies (LLCs) and LLCs are allowed to be incorporated with full (100%) foreign ownership. There is also a decrease in the extent of allocating a legal reserve of an LLC from 10% to 5% and the shareholders of an LLC may decide to stop such allocation if the legal reserve reaches 50% of its total share capital.

LLCs can carry out their economic activity(ies) all over UAE (including freezones) and outside of UAE (without restriction).

A registered lease agreement is required to incorporate.

Approvals may be required from the respective government authorities based on the type of economic activity to be registered.

Annual renewal of the license is required for the continued operation of the LLC.

Can this type of entity be involved in international transactions and restructurings (e.g. cross border mergers, asset acquisitions, equity acquisitions, etc.)?

Yes, the LLC can be involved in international transactions outside of UAE. However, in the UAE, an LLC is limited to share acquisitions (there are no asset/equity acquisitions).

Conversion from one (1) form to another is possible, provided that the provisions of the law and the rules and regulations of the applicable authorities are complied with.

Can this type of entity be publicly listed or held?

No, LLC entities cannot be publicly listed unless converted to a public joint stock company (to be regulated by the Securities and Commodities Authority).

Can this type of entity be used for a non-profit or charitable organization?


Give a brief summary of the process of incorporation, formation, or organization, including

Main documents required

For an individual:

  • Passport copy.
  • Residence visa & Emirates ID (if available). If not, copy of the entry stamp to identify the Uniform Identification No. (UID) as registered with the Immigration Department of UAE.
  • No Objection Certificate (if employed in another company).
  • Family book (for UAE national).

For a corporation:

  • Certificate of Incorporation.
  • Articles & Memorandum of Association.
  • Certificate of Incumbency.
  • Resolution for incorporation with appointment of the Board of Directors/managers including the powers and authorities granted to such Board of Directors/managers.
  • Ultimate Beneficial Owners (UBO) of the corporate shareholder/partner should be identified.
Involvement of notary, company register, governmental authorities

Kindly note that if the corporation is outside of UAE, the above documentation must be notarised at the Notary Public, authenticated at the Ministry of Foreign Affairs of the country of its issuance, attested at the UAE Embassy of the country of its issuance, legalised at the UAE Ministry of Foreign Affairs, and officially translated to Arabic.

Timing (estimate)

Approximately one (1) to two (2) weeks once all the above documentation is received and an office space is identified.

Main costs, including registration and similar fees (excluding legal fees)

Costs include registration and licensing of approximately AED 15,000 plus 5% of the annual leasing cost.

Is a description of the anticipated business or purpose of the entity required for incorporation, formation or organization?


Minimum number of incorporators / shareholders and residency requirements

To establish an LLC, the maximum number of shareholders is 50.

In addition, one (1) natural or juridical person may establish and own an LLC – this is the Single Owned LLC.

Pursuant to the UAE Commercial Companies Law, foreign ownership restrictions have been abolished and LLCs are allowed to establish companies with 100 percent full ownership.

Minimum number of directors (or other applicable officers) and residency requirements

One (1) or more managers or directors to be determined by the shareholders of the LLC. If the number of shareholders in the LLC is more than fifteen (15), the shareholders shall appoint a Supervisory Board consisting of at least three (s) shareholders for three (3) years starting as of the date of issuance of the appointment decision. The general assembly may re-elect such shareholders upon the expiry of such period or elect other partners. Also, the members of the Supervisory Board may be dismissed at any time for an acceptable reason. The managers/directors may not vote on the election or dismissal of the members of the Supervisory Board

No residency requirement except for the manager.

Minimum share capital, or equivalent, and payment requirements (including opening a bank account)

Depending on the activity to be registered, but generally no minimum share capital is required (no proof of share capital deposit must be submitted).

Is the physical presence of incorporators / directors required in the jurisdiction for incorporation, formation or organization?

Physical presence of the incorporator(s) and appointed manager(s) or director(s) is not required in the jurisdiction for incorporation and they can be represented by an appointee via duly executed and legalised Power of Attorney. However, such incorporator(s) and appointed manager(s) or director(s) should have at least entered UAE once in order to have a UID.

Is a tax identification number, or equivalent, required? If so, how is it obtained?

Value Added Tax (VAT) was first introduced in the UAE on 1 January 2018 whereby the rate of 5 percent (5%) is levied at the point of sale. It is mandatory for businesses to register for VAT in the following cases: (1) if the taxable supplies and imports of a UAE-based business exceed AED 375,000 per annum (2) if a non UAE-based business makes taxable supplies in the UAE. Meanwhile, VAT is optional for businesses whose supplies and imports exceed AED 187,500 per annum.

Additionally, as of 1 June 2023, a 9% corporate tax is to be applied to UAE businesses (which includes LLCs) on taxable profits above AED 375,000. Mainland companies such as LLCs need to register for corporate tax with the Federal Tax Authority (FTA) and obtain a tax identification number.

What is the title of the applicable company registry?

Department of Economic Development website.

National Economic website.

What types of information must be filed at the (company) register, and which of them will it be publicly available, e.g.: Articles , Ownership identification (direct and/or indirect ownership, 'beneficial owners') , Group structure , Share capital , Directors , Accounts , Insolvency, good-standing, liquidation , Liens and encumbrances on the shares , Liens and encumbrances on assets of the entity , Other (e.g. litigation, tax matters)

The information listed below must be filed with the authorities and is not publicly available:

  • Application form for reservation of the trade name of the company and the application form for initial license approval.
  • Board resolution(s).
  • Memorandum & Articles of Association.
  • License.
  • Books of Account or financial statements.
  • Powers of Attorney.
  • Certificate of Incorporation/Registration (for some free zones).
  • Specimen signature (for some free zones).
  • Passport copy of manager/director.
  • Share Certificates (for some free zones).
  • UBO information of the company registered in the UAE (including free zone and offshore).

Note: Despite the mandatory filing of the UBO information, such information remains confidential and not publicly available.

What is the title of the executive body and its members? What are their main duties, tasks and responsibilities?

The Board of Directors or the managers represent the company and must carry out management duties in the interests of the company in accordance with its objects as provided in the Articles and/or Memorandum of Association of the company.

How are the members of the executive body appointed, dismissed and replaced?

The appointment, dismissal, and replacement of the members of the Executive Body is provided for in the Articles and/or Memorandum of Association of the company.

Details of such appointment, dismissal and/or replacement can be further agreed through a Shareholders Agreement.

Is it possible to appoint corporate directors or must all directors be natural persons?


Is there a requirement to have non-executive directors? How are they appointed, dismissed and replaced? Do non-executive directors serve on a separate body (two-tier structure) or can a one-tier board (with executive and non-executives) be appointed, or is some alternate structure used?

It is possible to appoint a non-executive director, but this is not a mandatory requirement for an LLC as per the New UAE Commercial Companies Law.

The pertinent provisions of the New UAE Commercial Companies Law on the appointment, dismissal and replacement of a director are also applicable with respect to a non-executive director.

The incorporated entity has a one-tier board only.

What is the title of the body of owners / shareholders / members, and what are the main tasks / responsibilities / powers of that body?

The Company must have a General Assembly of all the shareholders whereby all the rights and obligations are provided by the New UAE Commercial Companies Law and regulations; and the Articles and Memorandum of Association.

The main tasks of the General Assembly are as follows: Amendment of Articles and Memorandum of Association, appointment of directors and/or manager, share purchase and transfer, increase, and decrease of share capital, profit/loss distribution, liquidation, changing of legal form and changing company name and activity.

What are the majority and quorum requirements for decisions by the shareholders? Can they be varied or changed?

Unless the Company’s Memorandum of Association provides for a higher percentage, the general assembly’s meeting shall not be deemed valid unless attended by a number of partners owning at least (50%) of the Company's capital,

If the quorum is not present at the first meeting as indicated in clause (1) of this article, the general assembly shall be invited for a second meeting to be held after a period of no less than (5) five days and not exceeding (15) fifteen days from the date of the first meeting. The second meeting shall be deemed valid irrespective of the number of the partners present.

The decisions of the general assembly shall be deemed valid only if they are passed by the majority of membership interests represented at the meeting, unless the Memorandum of Association provides for a higher majority.

However, it is not permissible to amend the Memorandum of Association of the Company nor to increase or decrease its share capital except with the approval of a number of shareholders representing at least three quarters of the shareholding interests represented in the meeting of the general assembly, and the percentage of such increase or decrease shall be pro rata to the percentage of partners' membership interests in the Company. In all cases, the financial obligations of the partners may not be increased except by their unanimous consent.

Any special governance regimes (e.g. depending on size, being listed at a stock exchange, or other criteria)?

If the number of the shareholders is over fifteen (15), the shareholders must appoint a Supervisory Board consisting of at least three (3) partners.

The Board of Directors of a company or its managers; as the case may be, is responsible for the implementation of the rules and criteria of governance.

What are the periodic accounting obligations incumbent upon the entity? To whom must those accounts be submitted?

The manager(s)/Board of Directors must prepare the company’s balance sheet and the profit and loss account. It/they must also prepare an annual report of the company’s activities, its financial position and shall submit the distribution of profits proposals to the General Assembly. All the above should be completed within three (3) months from the end of the company’s financial year.

Is the entity permitted to determine its own financial year?

An LLC has such financial year as may be determined in its Articles of Association, provided that the first financial year of the company must not exceed 18-months or be less than six (6) months, calculated from the date of registration of the company in the Commercial Register with the competent authority.

The subsequent financial years must consist of consecutive periods, each of 12-months commencing directly upon the expiry of the preceding financial year.

Is the entity subject to any statutory (external) auditor obligations?


Requirements to appoint other persons (officers, secretary, internal auditor / accountants). If so, what are their functions? Are there any residency requirements?

All employees working in an LLC are required to have a UAE residency visa sponsored by said LLC (employment visa).

What is the title designated for ‘ownership interests' (e.g. shares, quota, interests, membership)?


Are different classes of ownership interests possible? If so, what are some examples of different classes?

No classification of shares.

What documentation is required for the transfer of ownership interests?

For any transfer of shares, the following documents are required:

  • Duly executed resolutions approving the sale and purchase of shares.
  • Share Purchase and Transfer Agreement.
  • Amendment to the Memorandum and Articles of Association.

Are there any additional formal requirements required for the transfer of ownership (notary, approvals, stamping, filings, corporate records)?

To be notarised at the Notary Department of the UAE Courts.

Are there any applicable stamp duties imposed when transferring ownership interests?


How are shares issued? (including information on payment obligations, registration requirements)

As identified and provided in the Memorandum & Articles of Association of the entity.

Further information on equity contributions, e.g. , Non-cash payments on shares; (Share premium) contributions without issuance of shares , Can partially paid shares/ownership interests permitted and what are the restrictions on them?

The capital of the entity shall be composed of either a contribution in cash or an equivalent in the form of a contribution in kind.

Any requirements with respect to share cancellation, share repurchase and other capital reductions

No share cancellation and share repurchase.

Any increase or decrease in the share capital needs to be approved by the shareholders representing at least 75% of the share capital.

Any requirements with respect to distributions to shareholders?

The company must allocate 5% of its net profits each year to create a statutory reserve. The partners may resolve that the allocation of net profits shall be deducted from the net profits to the statutory reserve, and this may be discontinued when the reserve reaches half of the capital. The partners may allocate additional reserve as they see fit.

Can the owners or shareholders adopt a restrictive or governing agreement among themselves such as a Shareholders Agreement?


Which are the typical annual maintenance costs of maintaining the existence and legal good standing of such an entity (excluding legal fees)?

Annual License.

Annual Lease Agreement.

Annual immigration card (if with employees).

Annual audited financial statements (some free zones do not require submission of audited financials).

Submission of annual Ultimate Beneficial Ownership (UBO) declaration

Economic Substance Regulation (ESR) notification filing and ESR report if required.

Annual Costs:

  • License: Approximately 15,000 plus 5% of the annual leasing cost.
  • Lease: Depending on the property.

What are the general corporate tax rates? (Specify if there is a national versus local distinction).

As of 1 June 2023, a 9% corporate tax is to be applied to UAE businesses (which includes LLCs) on taxable profits above AED 375,000. Mainland companies such as LLCs need to register for corporate tax with the Federal Tax Authority (FTA) and obtain a tax identification number.

Summary of any specific matters, e.g. recent or prospective major legal developments

Key major amendments to the UAE laws were introduced. These are:

  • Federal Decree-Law No. 50 of 2022 on the Promulgation of the Commercial Transactions Law
  • Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses
  • Federal Decree-Law No. 41 of 2022 on the Civil Personal Status
  • Federal Decree-Law No. 38 of 2022 on the issuance of the Criminal Procedure Law
  • Federal Decree-Law No. 35 of 2022 Promulgating the Law of Evidence in Civil and Commercial Transactions
  • Federal-Decree Law No. 3 of 2022 concerning the regulation of Commercial Agencies
  • Dubai Law No. 4 of 2022 regulating Virtual Assets in the Emirate of Dubai
  • Federal-Decree Law No. 46 of 2021 on Electronic Transactions and Trust Services
  • Federal-Decree Law No. 45 of 2021 on the Protection of Personal Data
  • Federal-Decree Law No. 34 of 2021 concerning the fight against rumors and cybercrime
  • Federal-Decree Law No. 32 of 2021 on Commercial Companies
  • Federal-Decree Law No. 33 of 2021 on Regulations of Labour Relations
  • Cabinet Decision No. 57 of 2020 Determining the Economic Substance Requirements
  • Cabinet Decision No. 58 of 2020 On the Regulation of Procedures Related to Real Beneficiaries.

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Contact a member firm:
Mohammed R. Alsuwaidi
Al Suwaidi & Company
United Arab Emirates