In general, three options exist for those wishing to set up in a free
zone. A business wishing to operate from a free zone can either
incorporate a free zone establishment (FZE), a free zone company
(FZC) or operate through a branch office of a foreign or
local company. Branch offices are designed to be opened with a limited amount of administrative formality,
An FZE in the JAFZ requires a minimum capital of AED1,000,000.
The minimum capital requirement represents one share and it can
only have one shareholder.
The minimum capital required to incorporate an FZC is AED500,000
and an FZC can have between two and five shareholders. Each share
must have a minimum value of AED100,000 or multiples thereof and
there can only be one class of share.
The FZC must have a board of directors, consisting of a minimum of
three people and having at least two directors and one secretary
(although a person may hold both the offices of director and secretary
within a company simultaneously). These individuals must be resident
RIGHTS OF FZE’S AND FZC’S
One hundred per cent foreign ownership and full repatriation of
profits and capital is permitted.
Exemption from corporate and income taxes for a determined period,
regardless of subsequent changes to local laws.Goods may be imported
into the free zone, free of duty.
It is relatively straightforward to set up a company in a free zone. The
first step is to complete a questionnaire issued by the relevant FZA.
Once the questionnaire has been considered by the FZA the company
will be required to provide the FZA with information on individual
and corporate shareholders.
Individual shareholders are required to provide a personal profile
which may include a business background, specimen signatures,
domicile and address.
Corporate shareholders are required to provide:
a certificate of registration or good standing;
b memorandum and articles of association;
c board resolution authorising the incorporation of the FZE or FZC;
d powers of attorney in favour of the FZE/FZC managers; and
e audited financial statements for the last two financial years
Companies operating within the free zone are generally entitled to
employ who they wish. However, various administrative requirements
must be complied with such as providing the FZA with certain details
of the licence holder’s employees.
While rates of pay are not specifically regulated, a minimum salary is
stipulated in the JAFZ. Overtime rates are regulated by the FZA and
shift working must be notified to the FZA
Working hours are regulated and these are shortened during the Holy
Month of Ramadan. The shortened hours apply to all employees,
regardless of religion.
Employee numbers are restricted according to various criteria,
including office area and machinery installation.
The TECOM requirements are slightly different as the regulations only
provide for limited liability companies, composed of between one and
50 shareholders. The current minimum share capital for a TECOM limited
liability company is AED50,000 and the share capital may, upon the
appropriate approvals being received from the authorities, be divided into
different classes of shares. Each TECOM limited liability company is
required to have at least one director and may have a maximum of four