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Free zones in Dubai offer different types of companies. These include a Free Zone Establishment (FZE), a Free Zone Company (FZCO), a Free Zone Limited Liability Company (FZ LLC), a PLC, and a Private LLC. These types mainly differ in ownership structure, liability, capital requirements, shareholding and stock options, and scope of operations. For example, to set up an FZE, the minimum shareholder requirement is one, while for an FZCO, it is two, according to the official portal of Jebel Ali Free Zone. In addition, they also have differences in regulatory compliance and licensing procedures. For example, In a Jafza FZE, the owner is the sole decision-maker, while a Jafza FZCo requires a shareholder meeting as per the Jafza Companies Implementing Regulations 2016.
When it comes to free zone company types, they provide various options for businesses. However, not all types are legally operational in every Free Zone. For instance, you cannot set up an FZ LLC in the Dubai International Financial Centre, as prohibited by their Companies Law No. 5 of 2018 and Operating Law No. 7 of 2018. However, you can set up Companies Limited by Shares, as per the DIFC official portal. Similarly, in every free zone, you can only establish the legally allowed entities that are regulated by their specific free zone authorities and align with general law, such as the UAE Federal Law No. 2 of 2015 on Commercial Companies.
To establish a business in a Free Zone, you can choose any of the above legal types. However to choose the best you have to consider different factors. These include business activity, ownership structure, compliance requirements, and more. For instance, in the Jebel Ali Free Zone, you can establish only an FZE or a branch of a company for service, as per their official guidelines. To give you clear-cut differences between Freezone company types, our consultants are ready to assist. If you need help, they will guide you through a smooth and suitable entity selection.
How many types of companies are there in free zones in Dubai?
There are 3 common types of companies in free zones in Dubai. These include FZE, FZCo, and a branch of a company. However, this number varies from free zone to free zone. For instance, you can establish 5 types of free zone companies in JAFZA, 4 types in DMCC, and 3 types in DAFZ as per their official websites.
Unlike Dubai onshore company types, which are clearly mentioned in Federal Law No. 8 of 1984, as amended by Federal Law No. 13 of 1988, free zones do not have a specific number. This is because each free zone has a specific location that allows a business structure suited to them and has proven fruitful for the country’s economy. Below we have discussed the 4 types of free zone companies in detail.
FZE
A Free Zone Establishment (FZE) is a company type that has only one shareholder, as per the individual regulations of each specific Free Zone. For instance, in the Jebel Ali Free Zone, it is permitted under the Companies Implementing Regulations 2016. The purpose of this company type is to provide an opportunity for individuals who seek sole ownership and control to invest. This way, it provides foreigners with the opportunity to have 100% foreign ownership of the company without any need for a local sponsor.
It is a limited liability company. Also, a person is not just to establish it but a company can be the owner as per the official website of Jafza. The regulations for FZE are set by the specific free zone authority. For example, to establish in DMCC you have to follow the rules and regulations of DMCC authority. The rules set in one free zone will not affect the other as they operate as separate bodies. For example, the requirement for calling a meeting within a minimum of 12 months of FZE after the establishment of JAFZ as per Companies Implementing Regulations 2016 of the Jebel Ali free zone does not apply to DAFZ.
The cost required to set up such types of companies mainly depends on the license type, visa number, and office space. However, the average cost as per our team estimation is 40000 AED including everything such as registration fee, license fee, office space, and visa cost..But as we have discussed earlier these will change for different free zones. Similarly, the time for set up also depends on the free zone and the consulting firm you choose(optional). On average Felix Happich’s consultancy team takes about 1 to 3 weeks for the complete setup of FZE.
FZCo
A Free Zone Company (FZCO) is a type of company that can be owned by 2-50 shareholders at JAFZ and 1-50 shareholders at DAFZ. This ownership structure is specified by the Companies Implementing Regulations 2016 of the Jebel Ali Free Zone. It allows both a natural person and a juristic entity to be shareholders. The purpose of this company structure is to support investors in competing in larger markets through its funding and networking opportunities. This collaborative approach of shareholders helps them achieve the required investment and business growth. Additionally, it enables businesses to adopt a holistic perspective, benefiting from diverse ideas contributed by multiple shareholders.
Just like an FZE, it is also a limited liability company, which safeguards the personal assets of investors against company obligations, as outlined under Cabinet Decision No. (58) of 2020. Similarly, the shareholder can be either a natural person or a juristic entity, as stated on the official website of JAFZ. However, other free zones are not obligated to follow this rule, as they have their free zone authorities. Some even do not allow this type of entity to be set up there. For example, at DAFZ, you cannot establish such an entity.
Along with this, you cannot transfer shares, and you must fill out the Ultimate Beneficial Owner (UBO) form, as required by Cabinet Decision No. (58) of 2020, to declare the ultimate beneficiary of the company. This helps in having a solid shareholders’ agreement. To support foreign investors this entity type offers 100% foreign ownership as well.
Branch of a Company
A branch of a Company is a legal entity that functions as an extension of a parent company. It operates under the parent company’s name. This type of company aims to help investors operate another entity without any operational changes.
This setup allows 100% foreign ownership without needing a local sponsor. It is not a limited liability as it does not possess a separate legal identity from the parent company. It must follow the parent company’s regulations, and its operations are restricted to the free zone.
The cost of opening a branch of a company in a Free Zone depends on various factors, including license type, office space, and visa requirements. The setup typically takes between 1 and 4 weeks, according to estimates from the Felix Happich Consultancy team. To set up a branch, you must provide the Certificate of Registration/Trade License, Certificate of Incumbency (within 1 year), and MOA/By-Laws, as per the DMCC Company Formation – Application guidelines for a branch company.
Free Zone LLC
A Free Zone LLC is a limited liability company. It is designed for smaller groups seeking operational flexibility. Ownership is restricted to 1-50 shareholders as per the Dubai World Trade Centre (DWTC) official website. The setup is more affordable with a focus on share capital allocation and legal agreements. However, access to external funding and resources is limited. This makes it a more suitable option for businesses operating in consultancy, trading, and niche markets. Similar to other free zone companies it offers 100% foreign ownership and 0% corporate tax for qualified income.
Setting up a Free Zone LLC in free zones takes about 1 to 2 weeks. The process can be quicker in different free zones because it depends on the framework of the procedure. The cost in free zones also varies depending on the free zone and business activity, office space, number of visas, etc.
What are the main types of free zone companies in Dubai?
Dubai offers 4 main types of free zone companies, including FZE, FZCo, FZ LLC, and Offshore. However the main types differ from free zone to free zone for example in Dubai Airport free zone you can establish only FZE, FZCo, PLC, a branch of a company, and an offshore company as per their official website. To help you establish a company in a Dubai free zone, our team has provided details on the four main types of companies below.
4o
- FZE
- FZCo
- FZ LLC
- Branch of a Company
| Attribute | FZE | FZCO | FZ LLC | Offshore |
| Ownership | 100% ownership | 2–50 shareholders | 1-50 shareholders | 100% ownership |
| Operation | Ideal for small-scale businesses | Suits businesses requiring shared management | medium-sized enterprises | Used for international business, asset protection |
| Benefits | 0% corporate taxes on qualified income | 0% corporate taxes on qualified income | 0% corporate taxes on qualified income | 0% corporate taxes on qualified income |
| Profit Repatriation | 100% | 100% | 100% | 100% |
| Additional Agreements | Operational lease agreements | Partnership agreement, proof of share capital | Legal compliance and operational licensing | Minimal legal agreements |
| Costs | $10,000 – $30,000 (average) | $10,000 – $25,000 (average) | $10,000 – $35,000 (average) | $3,000 – $15,000 (average) |
| Setup Time | 1–3 weeks | 2–4 weeks | 3–6 weeks | 1–2 weeks |
| Business Control | Complete | Less | Less | Complete |
| Decision Making | Independent | Dependent | Dependent | Independent |
What Is the Most Popular Free Zone Company Type in Dubai?
The most popular free zone company choice is FZE for sole proprietors and FZC for businesses with multiple investors or partners. Similarly, free zone offshore is famous for International Business management.
However, the relative popularity of these company types is different in different free zones. As it is influenced by multiple factors. Some of these include industry trends, business objectives, and economic conditions.
