For businesses looking to capitalize on the unique advantages offered by the United Arab Emirates, Abu Dhabi’s Free Zones present a compelling proposition. While Free Zone Establishments (FZE) cater to single shareholders, the Free Zone Company (FZC) model is designed for multiple shareholders, making it a popular choice for collaborative ventures. This article delves into the nuances of the FZC, its features, benefits, and the process involved in its formation.
What is a Free Zone Company?
A Free Zone Company (FZC) is a type of business entity established within one of the specialized free zones of Abu Dhabi. These zones offer a distinct set of benefits tailored to international business needs. An FZC can be established by a minimum of two shareholders, which can be individuals, corporate entities, or a combination of both.
Key Features of an FZC
Multiple Shareholders
While an FZE is for single shareholders, an FZC is set up with two or more shareholders, up to a maximum limit that varies depending on the specific free zone.
Ownership
FZCs allow 100% foreign ownership, a significant deviation from the general UAE requirement of a local sponsor for onshore companies.
Regulatory Environment
Operating within a free zone, FZCs adhere to the regulations of the specific Free Zone Authority rather than UAE’s federal business laws.
Taxation
FZCs generally benefit from tax exemptions on profits, capital gains, imports, and exports.
Repatriation
Businesses can repatriate 100% of their capital and profits, ensuring a free flow of funds.
Advantages of Setting up an FZC
- 100% Foreign Ownership: Multiple shareholders can fully own the company without local sponsorship.
- Tax Benefits: Enjoy comprehensive tax exemptions, often for a specified number of years and potentially renewable.
- Strategic Location: Free zones are usually strategically located near ports, airports, and major highways.
- Ease of Setup: Streamlined procedures and dedicated free zone services facilitate quicker business establishment.
- Operational Flexibility: Enjoy more relaxed regulations and operational restrictions in comparison to onshore companies.
- Access to Markets: Benefit from the free zone’s established logistics and transport infrastructure.
Regulatory Authorities
Free Zone Authority
Each free zone is governed by its Free Zone Authority. This body is responsible for overseeing businesses, ensuring compliance, and issuing licenses.
Documentation and Legal Requirements
Formation Documents
Typically, you would need:
- A detailed business plan.
- Copies of shareholders’ passports.
- Application forms specified by the chosen free zone.
- Reference letters from banks.
Licenses and Approvals
FZCs must obtain a business license relevant to their operations. The license type can range from trading and services to manufacturing, among others.
Steps to Establish an FZC in Abu Dhabi
- Identify the Right Free Zone: Based on your business nature, choose a free zone that aligns with your operational needs.
- Reserve a Company Name: Ensure that the chosen name adheres to the naming conventions of the free zone.
- Apply for Initial Approval: Submit relevant documents and obtain initial approval from the Free Zone Authority.
- Legal Framework: Prepare and finalize the Memorandum and Articles of Association.
- Acquire the Business License: Once the business type is determined, apply for the corresponding business license.
- Secure Office Space: Depending on the free zone and your business requirements, lease or purchase suitable office or operational space.
- Final Registration: With all prerequisites in place, finalize the registration process with the Free Zone Authority.
- Begin Operations: With approvals secured and licensing in place, you’re all set to commence your business activities.