Abu Dhabi Company Formation: Complete Guide

Formation Jurisdictions

Abu Dhabi offers three distinct jurisdictional pathways for company formation, each with different regulatory frameworks, ownership rules, tax implications, and operational restrictions. Selecting the correct jurisdiction is the most consequential decision in the formation process.

1. Mainland (Onshore Abu Dhabi)

Mainland companies are licensed by the Abu Dhabi Department of Economic Development (ADDED) and operate under UAE federal commercial law and Abu Dhabi emirate-level regulations.

Key Characteristics:

• Governed by UAE Federal Decree-Law No. 32 of 2021 (Commercial Companies Law)
• Following the 2020 amendments, 100 percent foreign ownership is permitted for most commercial activities (previously capped at 49 percent, requiring a 51 percent Emirati partner)
• Certain strategic activities remain restricted to UAE/GCC nationals
• Companies can trade freely anywhere in the UAE without geographic restriction
• Subject to 9 percent federal corporate tax (effective June 2023)
• Subject to 5 percent VAT
• Requires physical office premises in Abu Dhabi

Entity Types Available:

• Limited Liability Company (LLC) — the most common entity. Minimum two shareholders (individual or corporate), no minimum capital requirement for most activities. Suitable for trading, services, manufacturing, and most commercial operations.
• Sole Establishment — single-owner entity, 100 percent individual ownership. The owner has unlimited personal liability. Suitable for professional services, consultancy, and small-scale operations.
• Civil Company — for professional services (legal, medical, engineering, consulting). Partners must hold relevant professional qualifications.
• Branch of Foreign Company — allows foreign companies to establish a branch in Abu Dhabi. The branch is not a separate legal entity; the parent company retains full liability.
• Public Joint Stock Company (PJSC) — for large enterprises intending to list on the Abu Dhabi Securities Exchange. Minimum capital AED 30 million. Minimum five founding shareholders.
• Private Joint Stock Company — minimum capital AED 5 million. Minimum two founding shareholders. Not listed on a public exchange.

Formation Steps:

1. Initial approval — obtain initial approval from ADDED for the proposed trade name and activity
2. Memorandum of Association — draft and notarise the MOA (for LLCs and joint stock companies)
3. Office lease — secure physical office premises and obtain a tenancy contract (Tawtheeq registered)
4. License application — submit the completed application with required documents to ADDED
5. Additional approvals — obtain sector-specific approvals if required (e.g., DoH for healthcare, SCA for financial services)
6. License issuance — receive the commercial license upon completion of all requirements
7. Immigration establishment card — register with the Federal Authority for Identity and Citizenship for visa allocation
8. Corporate bank account — open a bank account with a UAE-licensed bank

Typical Timeline: 2-4 weeks for straightforward applications. Complex activities requiring additional regulatory approvals may take 6-12 weeks.

Indicative Costs:

• Trade license: AED 10,000-30,000 annually (varies by activity type)
• Initial approval fees: AED 1,000-3,000
• Memorandum of Association notarisation: AED 2,000-5,000
• Office lease: AED 20,000-100,000+ annually (varies by location and size)
• Visa costs: AED 3,000-5,000 per employee visa
• Total first-year setup: AED 40,000-150,000+ depending on activity, office, and visa requirements

2. Abu Dhabi Global Market (ADGM)

ADGM is an international financial centre operating under its own legal jurisdiction on Al Maryah Island. Companies registered in ADGM operate under English common law and are regulated by the ADGM Registration Authority and, for regulated activities, the Financial Services Regulatory Authority (FSRA).

Key Characteristics:

• English common law jurisdiction (separate from UAE civil law)
• 100 percent foreign ownership permitted for all activities
• Own court system with internationally appointed judges
• Zero percent corporate tax for qualifying activities (subject to UAE federal corporate tax framework)
• Companies primarily operate within ADGM jurisdiction; conducting onshore UAE business may require dual licensing
• Over 1,800 registered entities

Entity Types Available:

• Special Purpose Vehicle (SPV) — holding companies, investment vehicles, structured finance. Minimal operational requirements. Popular for asset holding, family wealth structuring, and investment fund vehicles.
• Private Company Limited by Shares (Ltd) — standard corporate entity for operating businesses. Minimum one shareholder, one director.
• General Partnership / Limited Partnership — for professional services firms and investment partnerships. Limited partnerships are common for fund structures.
• Branch of Foreign Company — for international firms establishing ADGM presence.
• Regulated entities — fund managers, asset managers, banks, insurance companies, fintech firms. Require FSRA licensing in addition to Registration Authority registration.

Formation Steps:

1. Online application — submit application through ADGM’s digital registration portal
2. KYC and due diligence — provide identification, background checks, and source of funds documentation for shareholders and directors
3. Business plan review — for regulated activities, submit a detailed business plan to the FSRA
4. Registration approval — Registration Authority issues a certificate of incorporation
5. Regulatory licensing — for regulated activities, obtain an FSRA Financial Services Permission
6. Office lease — secure premises within ADGM jurisdiction (virtual office options available for certain entity types)

Typical Timeline: 1-2 weeks for SPVs and non-regulated entities. 3-6 months for FSRA-regulated entities due to regulatory review process.

Indicative Costs:

• SPV registration: $2,000-4,000 annually
• Commercial license (non-regulated): $5,000-15,000 annually
• FSRA regulated entity: $20,000-75,000+ annually (varies by license category)
• Data protection registration: $300 annually
• Office lease (Al Maryah Island): premium rates, coworking options from $500/month

3. Other Free Zones

Abu Dhabi operates several free zones beyond ADGM, each targeting specific sectors:

KIZAD (Khalifa Industrial Zone Abu Dhabi)

• Focus: industrial, logistics, manufacturing, warehousing
• Location: between Abu Dhabi and Dubai, adjacent to Khalifa Port
• 100 percent foreign ownership
• Long-term land leases (up to 50 years)
• License costs from AED 10,000 annually
• No minimum capital requirement for most activities
• Direct access to Khalifa Port for import/export operations

Masdar City Free Zone

• Focus: clean technology, sustainability, renewable energy, R&D
• Location: Masdar City, Abu Dhabi
• 100 percent foreign ownership
• Flexible office solutions including co-working
• License costs from AED 11,500 annually
• Supports innovation-focused companies and startups

twofour54

• Focus: media, entertainment, gaming, content production
• Location: Yas Island, Abu Dhabi
• 100 percent foreign ownership
• Media-specific infrastructure and support services
• Freelancer permits available
• License costs from AED 15,000 annually

Abu Dhabi Airports Free Zone

• Focus: aviation, aerospace, logistics
• Location: adjacent to Abu Dhabi International Airport
• 100 percent foreign ownership
• Air cargo and logistics infrastructure

Comparative Assessment

Choosing the Right Jurisdiction

Choose Mainland if:

• The business needs to trade freely throughout the UAE with no geographic restriction
• The activity involves government contracting or public sector clients
• Retail operations or consumer-facing services in Abu Dhabi
• Activities restricted to mainland licensing (certain professional services, construction, oil and gas services)

Choose ADGM if:

• The business operates in financial services, fintech, or asset management
• English common law is required for investor or partner comfort
• The entity is a holding company, SPV, or investment vehicle
• International arbitration and contract law frameworks are priority
• The business does not need to trade directly in the UAE onshore market

Choose a Sector-Specific Free Zone if:

• The business aligns with the free zone’s sectoral focus
• Manufacturing or industrial operations (KIZAD)
• Clean technology or sustainability (Masdar City)
• Media production or entertainment (twofour54)
• Import/export operations requiring port access (KIZAD)

Practical Considerations

Banking: Opening a corporate bank account in the UAE can take 4-8 weeks and requires extensive KYC documentation. Banks conduct due diligence on beneficial owners, source of funds, and business activities. ADGM-registered entities may face additional scrutiny from onshore banks unfamiliar with the ADGM framework.

Visa Allocation: Mainland and free zone licenses include visa allocation for employees. The number of visas depends on office size (mainland) or license package (free zones). ADGM provides visa allocation through its own immigration framework.

Ongoing Compliance: All jurisdictions require annual license renewal, financial statement preparation (audited for ADGM and certain mainland entities), and regulatory filings. ADGM entities are subject to beneficial ownership disclosure, data protection registration, and anti-money laundering compliance obligations.

Intellectual Property: IP registration is managed at the UAE federal level (Ministry of Economy) for mainland and free zone entities. ADGM has supplementary IP regulations. International IP protection should be secured through WIPO and bilateral treaty frameworks, as UAE-registered IP may not provide automatic protection in other jurisdictions.