If you’re based in the UAE, you’ve probably wondered what the difference between a mainland company and a free zone company is. The key differences between the two are the location of your customers and the nature of your business. A free zone is a government-sponsored entity, while a mainland company is an onshore company licensed by the Department of Economic Development (DECD) to conduct business in the UAE and outside of it.
1: The first major difference between a mainland company and a free zone company is that a Mainland Company is licensed by the Department of Economic Development (DED) and allows you to conduct business throughout the United Arab Emirates. Mainland companies do not have visa restrictions, while a Dubai freezone company formation is limited to the boundaries of the Free Zone.
2: Mainland companies are often easier to establish than a free zone, but the latter requires a local sponsor, who pays a fee to the DED for 51% of the company’s shares. However, a Free zone is 100 percent owned by an expatriate partner, and it doesn’t require any local body. Both companies must be registered and have office space within the UAE.
3: One of the primary differences between a mainland company and a free zone company in their jurisdiction. Mainland companies are licensed by the Department of Economic Development, whereas free zone companies are not. Moreover, unlike free zones, they can conduct business anywhere in the UAE, which requires multiple approvals. Furthermore, a mainland company is more flexible and offers more flexibility. The biggest advantage of a Mainland Company is that it can operate in various areas.
4: A different governing body governs a free zone company. A mainland company is controlled by the government, while a free zone has a governing body that grants its licenses. A company can operate in any part of the UAE in a free zone. For instance, a Mainland Company can engage in all commercial and industrial activities, while a Free zone can only do banking and insurance. These are some major differences between mainland companies and free zone companies. If you are investing in UAE, you must know these differences.