Starting a business in Abu Dhabi - A step-by-step guide

Starting a business in Abu Dhabi - A step-by-step guide

- Jonathan Kelly

Abu Dhabi, the capital and largest emirate of the UAE, plays a pivotal role in the country's economy, contributing about two-thirds of the roughly $503 billion national GDP. 

It controls more than 90% of the country’s oil reserves and 95% of its natural gas reserves, making it a key player in the global energy market. 

However, Abu Dhabi is much more than just an oil powerhouse.

Sustained investment in knowledge-based industries has enabled it to diversify into sectors such as aviation, clean technology, financial services, legal services tourism, logistics and education which now collectively contribute over 60% to the emirate’s GDP.

This has opened up opportunities for investment and made the emirate an attractive destination for international businesses looking for a stable and progressive environment to expand their operations.

Identifying a business activity in Abu Dhabi

When starting a business in Abu Dhabi, identifying the correct business activity is crucial as it directly influences the legal and licensing requirements necessary to operate. The choice of activity determines the type of business licence required, each tailored to specific operations and governed by distinct regulations. 

Abu Dhabi offers six main types of business licences: industrial, for manufacturing or industrial activities; tourism, for travel-related services; professional, for consultancies and professional services; commercial, for trading activities; agricultural, for farming and related activities; and occupational, for craftsmen and artisans. 

Selecting the appropriate one is essential for smooth business operations in the emirate.

Selecting the appropriate legal structure for the Abu Dhabi company

Selecting the right legal form is essential as it influences everything from your liability and tax obligations to your ability to repatriate profits. 

For instance, an LLC offers limited liability to its owners and is a requirement for certain activities, while a partnership might be preferable for professional services managed by multiple individuals. The options are:

  • Limited Liability Company (LLC)
  • Sole Proprietorship
  • Civil Company
  • Branch Office
  • Representative Office
  • Private Shareholding Company (Private Joint Stock Company)
  • Public Shareholding Company (Public Joint Stock Company)
  • Free Zone Company
  • Partnership Company
  • Foreign Company Branch

Choosing the appropriate jurisdiction in Abu Dhabi

There are three available jurisdictions, each catering to different business needs, with advantages and potential limitations based on your strategy and market interaction.

  • Mainland: Now permitting 100% foreign ownership in most sectors, the mainland is ideal for those targeting direct trade with the UAE market. This option allows foreign investors to operate without a local sponsor, offering greater operational control.
  • Free Zone: There are 5 free zones in Abu Dhabi, each offering 100% foreign ownership, complete profit repatriation and tax and import/export duty exemptions Industry clustering makes them suitable for businesses focusing on specific industries. However, trading directly with the UAE market typically requires a local distributor.
  • Offshore: Ideal for international trading activities outside the UAE, asset holding, investments, estate and succession planning, and serving as Special Purpose Vehicles (SPVs) for financial transactions.

Abu Dhabi Trade name registration

You should choose a unique company name that clearly reflects your business activities and is not similar to any existing registered company name. 

Ensure the name adheres to UAE public morals and order and receive approval from the DED to avoid conflicts with trademarks or previously registered names.

Initial approvals and legal documents required in Abu Dhabi

Obtaining initial approvals from the Department of Economic Development (DED) in Abu Dhabi starts with submitting the necessary documentation, including a detailed business plan and identifying documents for shareholders. 

Depending on your business structure, you will also need to prepare and submit critical legal documents such as the Memorandum of Association for LLCs, or a Local Service Agent Agreement if you're establishing a professional services firm. 

These documents must outline the business activities, ownership details, and operational procedures. Once these are in order, the DED will review and issue the initial approval, allowing you to move forward with further business setup processes.

Additional approvals and licensing in Abu Dhabi

Securing a business licence in Abu Dhabi often requires additional approvals from various government bodies, tailored to the specific activities and scope of your business. 

For instance, businesses involved in security services must obtain clearance from the Ministry of Interior, while those in the healthcare sector need approval from the Health Department. 

Each relevant authority assesses the business against specific regulations to ensure compliance. Once all necessary approvals are granted, the Department of Economic Development (DED) will issue the final business license, allowing the company to operate legally.

How Can PRO Partner Group Help?

Establishing a company in Abu Dhabi involves a thorough understanding of local regulations and governing bodies in order to find the best company formation solution. This is where the expertise of a professional corporate services provider becomes invaluable, request a free consultation today.

PRO Partner Group offers unrivalled expertise in the legal and regulatory landscape and direct access to government bodies and regulatory authorities. 

We can guide you through every step of setting up your business in Abu Dhabi, from initial registration with the relevant authority to obtaining your trade licence and ensuring compliance with all local and international regulations.

If you need assistance with this or with any other related company setup, restructuring, local partner or PRO support matter in Abu Dhabi, Dubai, the wider UAE, Saudi Arabia, Bahrain, Oman or Qatar, then please do get in touch with us on+971 (0)2 448 5120 for Abu Dhabi or +971 (0)4 456 1761 for Dubai, email us at info@propartnergroup.com or complete the contact form below and we will be delighted to assist you.

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