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An FZCO ( Free Zone Company) in Dubai, is a legal business entity within the free zones. Unlike FZE companies, an FZCO allows up to 50 shareholders, accommodating both individuals and corporations as per the regulatory frameworks of various Free Zone Authorities (FZAs). For example, Jebel Ali Free Zone Authority (JAFZA) explained this in company regulation in 2016. This flexibility is a key feature, making it an ideal choice for partnerships when investors are proceeding in a competitive niche.
The operational framework of an FZCO is set by the respective Free Zone Authorities (FZAs). The authorities set rules and offer comprehensive support to streamline business operations. Along with this, they abide by the laws of government bodies. For instance, naming an FZCo in DSO follows Dubai Integrated Economic Zones Authority Implementation Regulations 2023, aligned with the UAE’s Federal Law No. (37) of 1992 on Trademarks.
Free Zone Compay offers several benefits. One of the most appealing aspects of an FZCO is the ability to maintain 100% foreign ownership according to Free zone Regulations. This empowers foreign investors to perform business activities without relying on a local sponsor. Additionally, Free Zone companies benefit from corporate tax exemptions, except for non-qualified income, which is taxed at 9% as per Federal Decree-Law No. 47 of the UAE Corporate Tax Law.
Setting up an FZCO involves a straightforward process. You can set an FZCO following some basic steps. However, these steps may not follow the same in every free zone. The 1st thing is to select an appropriate free zone and opt for a business activity you want to get into. Then submit the necessary documentation, and meet specific capital requirements based on the business type. For instance, in JAFZA, the Articles of Association (AoA) and the Memorandum of Association (MoA) must state the shareholder details, including their number and value of shares. The complete process for setting up an FZCO takes 2–4 weeks to complete, but this depends on the FZ.
What is FZCO (Free Zone Company) in Dubai?
A Free Zone Company (FZCO) is a limited liability company with 2–50 shareholders in the free zone, offering 100% foreign ownership, 100% tax exemption on qualifying income for 50 yrs, and 100% repatriation of profits. It is operated by the specific free zone authority. For example, the DAFZ is operated by DAFZA( Dubai Air Port Free Zone Authority). FZCo allows sharing opportunities however the share holder can be a natural person or a juristic body as per the official website of Jafza.
The purpose of an FZCO is to support investors who want to enter the competitive field with less investment by forming partnerships in Dubai Free Zones. Secondly, it empowers investors by eliminating the need for a local sponsor(Kafala System) making business decisions easy. Not only does it provide asset protection but also helps in avoiding any loss of personal income in the shape of company failure as per Limited liability regulations.
How Does Dubai FZCO (Free Zone Company) Operate?
FZCOs operate under the jurisdiction of the individual Free Zone Authorities. Along with the regulation of the specific free zone it has to follow specific UAE laws related to trade and investment. For instance, each free zone has its set of rules for providing licenses but must follow Federal Law No. 8 of 2004 on Financial Free Zones.
Irrespective of difference every free zone needs a license to get FZCO registered. For example, JAFZA, DWTC, and DAFZ need a business license before you register a company as per their official portal. Similarly, you need a director (must be a human) and a manager for FZCO operations according to JAFZA Companies Implementing Regulations and Free Zone Rules and Regulations V9 2024 of DWCT.
The business activities of FZCO are similarly restricted to Free Zone like other limited liability companies. However, after the permission of the free zone authority and obtaining a license from the Department of Economic Development, FZCO can trade within the mainland as per the UAE’s official website.
How many shareholders are there in FZCO in the Dubai Free Zone?
There are only 2-50 shareholders possible for FZCO (Free Zone Company). The shareholders can include individuals (natural persons), corporate entities (companies), or a mix of both, allowing for 100% foreign ownership. For example, a shareholder in an FZCO can be a foreigner without any physical presence or the need for a local sponsor, as per the 2016 Companies Implementing Regulations of the Jebel Ali Free Zone.
Along with this, a shareholder agreement is required since a single person cannot own an FZCO, as it mandates a minimum of two shareholders. This shareholder agreement is governed by UAE law and Free Zone regulations. For instance, to protect the rights of every shareholder in DAFZ, the Articles of Association are maintained by the DAFZA (Dubai Airport Free Zone Authority).
Free Zone Company (FZCO) Setup Process
Unlike the FZE, the company setup process for an FZCO takes a bit longer as it requires a shareholder agreement and other related documentation to formalize the roles of multiple shareholders. However, the overall procedure is largely similar, with the main difference being that steps can vary slightly from one Free Zone to another depending on the type of business being set up.
Just like setting up any entity in a free zone first you select a free zone the next is to specifically mention the company type which in this case is FZCO. After that, you have to follow the below-provided procedure step by step.
- Choose the Free Zone
- Determine Company Structure
- Select Business Name
- Prepare Required Documents
- Passport Copies
- Proof of Address
- Business Plan
- Shareholder Agreement (if applicable)
- Memorandum of Association (MOA)
- Ultimate Beneficial Owner (UBO) Declaration
- Apply for a Business License
- Sign Legal Documents
- Articles of Association
- Shareholder Agreement
- Lease Office Space
- Pay Government Fees
- Open a Corporate Bank Account
- Receive License and Certificate
What is the cost of a Free Zone Company (FZCO) setup in Dubai?
The cost of setting up a Free Zone Company (FZCO) in Dubai ranges from 30,000 AED to 80,000 AED. However, the cost depends on different factors. The cost of 6 key factors are provided below:
- Registration Fees
- Business License Fees
- Office Space Leasing
- Share Capital
- Legal and Documentation
- Visa Fees
- Miscellaneous Fees
The below table provides the cost only including the broad section for detailed analysis you can consult with our expert.
| Cost Component | Estimated Cost (AED) | Note |
| Registration Fees | 10,000 – 50,000 | Differ based on business type. |
| Business License Fees | 7,000 – 15,000 | Depends on the license type also |
| Office Space Leasing | 15,000 – 50,000 | Differ based on size and location |
| Share Capital | 50,000+ | The minimum varies by Free Zone and business type. |
| Legal and Documentation | 2,000 – 5,000 | Includes MOA and Shareholder Agreement |
| Visa Fees | 3,000 – 10,000 per visa | Depends on the number of visas |
| Miscellaneous Fees | 2,000 – 5,000 | Includes bank account setup, attestation, etc. |
Rules and Regulations of FZCO (Free Zone Company) in Dubai
FZCOs follow legal frameworks established by the Dubai Free Zone Authority.
- Shareholders
An FZCO has shareholding regulations that allow a minimum of 2 shareholders and a maximum of 50, as per the regulations of the Free Zone Authorities. For example, the minimum number of shareholders required for an FZCO in JAFZA is 2, as per the Companies Implementing Regulations, while the maximum can reach 50, depending on the investor’s specific business requirements.
- Ownership
A single person can not be the sole owner of fzco but he can be the shareholder. However free zone authorities allow 100% foreign ownership. Along with this the share owner can be an individual with having actual human identity or a company.
- Capital Requirements
FZCO shares must have a fixed nominal value. However, this depends on individual free zone policies. For instance for FZCO in DSO the minimum share capital required is AED 1 as per DIEZA_Implementing_Regs_2023.
- Licensing
License is a must in every free zone to operate an FZCO. It is not possible to operate without a license in any of the free zones in Dubai. For example, you will get a fine in JAFZA if you operate without a license as per their official website.
- Office Space
Although physical presence is not necessary for the owner it is a must for the director to be physically present in Dubai for operating FZCO. However, The size and type of office required depend on the Free Zone regulations and the nature of your business.
- Taxation
FZCO is exempted from corporate and other taxes with some requirements as per UAE Federal Tax Law, UAE Commercial Companies Law, and specific Free Zone regulations. For example, the qualifying income has 0% corporate tax as per UAE Commercial Companies Law (Federal Decree-Law No. 32 of 2021).
- Reporting and Compliance
FZCO reporting and compliance requirements include annual audits, Ultimate Beneficial Owner (UBO) declarations, and the submission of necessary financial statements. For example, in JAFZA, an auditor is required to submit an audit report annually as per the JAFZA Companies Implementing Regulations 2016.
- Restrictions
Being a Free Zone business entity, an FZCO cannot directly trade in the mainland. However, it requires additional approval from the Free Zone Authority and other government bodies, such as the Department of Economic Development (DED), which regulates mainland activities. For example, in Dubai Silicon Oasis, an FZCO cannot engage in activities outside the Free Zone without acquiring permission from the relevant authorities and obtaining a mainland license.
What are the Advantages of FZCO (Free Zone Company) in Dubai?
The advantages of a Free Zone Company (FZCO) in Dubai include asset protection, 100% tax exemption, repatriation of profits, no customs duties, and the opportunity to compete with major players through shareholding facilities, enabling larger investments collectively. Below are the 14 common advantages of FZCOs in Dubai Free Zones:
- Tax Exemptions
- 100% Foreign Ownership
- Sharing Opportunity
- Strategic Location
- Simplified Setup
- No Currency Restrictions
- 100% Repatriation of Business Profit
- Business Flexibility
- Low Operational Costs
- Access to Free Trade Zones
- No Import/Export Duties
- Employee and Investor Visas
- Maximum Reach to the Global Market
- Protection for Personal Assets
What are the Disadvantages of FZCO (Free Zone Company)?
Along with offering multiple benefits, FZCOs have some drawbacks, which are worth mentioning below. However, with a strategic business plan, you can effectively manage these challenges. Our team is here to assist you throughout the process, helping you achieve the best results you expect.
- Higher Employer Costs
- Regulatory Restrictions in Mainland
- Dependency on Free Zone Authority
- Office Leasing Requirements
What is the Difference Between FZCO and FZE?
The difference between FZCO and FZE is significant in terms of structure, capital requirements, setup time, and other key factors. Understanding these differences is essential for choosing the best entity between the two. Below is a detailed comparison of the FZCO and FZE (Free Zone Establishment) to help guide your decision-making process.
| Aspect | Free Zone Company | Free Zone Establishment |
| Abbreviation | FZCO | FZE |
| Number of Shareholders | Min 2, Max 50 | 1 maximum |
| Ownership | 100% foreign ownership allowed | 100% foreign ownership allowed |
| Type of Entity | Free Zone Company (multiple shareholders) | Free Zone Establishment (single shareholder) |
| Business Structure | Suitable for companies with multiple investors or partners | Ideal for solo entrepreneurs or single-shareholder companies |
| Flexibility in Shareholding | Greater flexibility in shareholding | Limited to one shareholder only |
| Minimum Capital Requirement | Varies, typically AED 50,000 or more but 1 AED for DSO | Minimum capital is usually AED 1 (or equivalent) |
| Setup Time | 2-4 weeks depending on Free Zone | 1-2 weeks, faster setup |
| Setup Cost | AED 30,000 to AED 80,000 oveerall | AED 15,000 to AED 45,000 |
| Decision-Maker | Board of directors or multiple decision-makers | Single shareholder or director with full decision-making authority |
| Visa Options | Can sponsor multiple visas | Can sponsor a limited number of visas |
| Office Space | Requires larger office space depending on shareholders | Requires smaller office space/ also possibility of a virtual office is there |
What is the difference between FZCO and FZ LLC?
The difference between FZCO and FZ LLC is that FZCO is generally more suitable for smaller groups of shareholders, while FZ LLC provides a more flexible structure for larger shareholder groups, offering limited liability protection and a broader scope for business expansion. Irrespective of the differences, all types of free zone companies share some similarities, including tax exemptions for qualifying income. The table below highlights some of the key differences between FZCO and FZ LLC.
| Aspect | Free Zone Company | Free Zone Limited Liability Company |
| Abbreviation | FZCO | FZ LLC |
| Number of Shareholders | Minimum 2, Maximum 50 | Minimum 2, No maximum limit |
| Ownership | 100% foreign ownership allowed | 100% foreign ownership allowed |
| Type of Entity | Free Zone Company | Free Zone Limited Liability Company |
| Business Structure | Suitable for multiple investors/partners | Suitable for larger groups of shareholders |
| Flexibility in Shareholding | Up to 50 shareholders | More than 50 shareholders, no strict limit |
| Capital Requirement | Typically AED 50,000 | Typically AED 100,000 or more |
| Setup Time | 2-4 weeks | 2-4 weeks |
| Setup Cost | AED 30,000 to AED 80,000 | 15,000-45,000 AED |
What is the difference between FZCO and PLC?
The FZCO and PLC differ in shareholder requirements, ownership, capital needs, setup costs, and operational requirements. The table below explains the difference between a Free Zone Company (FZCo) and a publicly listed Company (PLC).
| Aspect | Free Zone Company | Public Listed Company |
| Abbreviation | FZCO | PLC |
| Number of Shareholders | Two to 50 shareholders | Two to multiple shareholders |
| Ownership | 100% foreign ownership | 100% foreign ownership |
| Type of Entity | Limited liability company with multiple shareholders | Public joint-stock company |
| Capital Requirement | require specific paid-up capital | Higher capital requirements |
| Setup Time | 2-4 weeks | 1-5 weeks |
| Setup Cost | AED 30,000 to AED 80,000 | 20,000-70,000 AED |
| Decision-Maker | Multiple decision-makers or a board of directors | Board of directors accountable to shareholders. |
| Visa Options | Can sponsor multiple visas. | Multiple visas, facilitating a larger workforce. |
| Office Space (Physical) | Depends on business activity. | Requires larger office space |
