Entity Types Under Federal Decree-Law No. 32 of 2021
Overview
The UAE Commercial Companies Law (CCL) governs company formation. The 2021 amendment introduced 100% foreign ownership for mainland companies.
1. Limited Liability Company (LLC)
Most common mainland entity. Liability limited to shares. 1-50 shareholders. No minimum capital requirement. 100% foreign ownership allowed since 2021. Best for small to medium businesses.
2. Private Joint Stock Company (PrJSC)
Liability limited to shares. Minimum capital AED 2,000,000. Minimum 2 shareholders. Shares not publicly traded. Board of directors management. Best for larger companies planning future IPO.
3. Public Joint Stock Company (PJSC)
Minimum capital AED 30,000,000. Minimum 10 founders. Shares publicly traded. Board of directors management. Best for large corporations seeking public listing.
4. Sole Proprietorship
Unlimited personal liability. Owner must be UAE national (for commercial activities). No minimum capital. Owner manages directly. Best for small personal services by UAE nationals.
5. Civil Company
Unlimited liability (unless LLC-structured). For professionals (engineers, doctors, consultants). 100% foreign ownership for certain professional activities. Local agent required for some activities. Best for professional service firms.
6. Branch of Foreign Company
Parent company is liable. 100% foreign ownership. Same activity as parent company. No local sponsor required since 2021 reforms. Best for international companies entering the UAE market.
Choosing the Right Entity
Consider number of shareholders, capital requirements, liability tolerance, future plans (IPO, expansion), tax implications, regulatory requirements, and ownership preferences.