UAE company formation: licensing, structure and contractual protection

Why the UAE — and where the hidden risk sits

The UAE attracts Iranian founders because of foreign ownership in most activities, Jebel Ali’s logistics spine, international banking and access to Asia, Europe and Africa. The Commercial Companies Law (Federal Decree-Law No. 32 of 2021) allows 100% foreign ownership in most mainland activities.

The licence is only the start of liability. Articles that leave exit rights vague, a power of attorney that lets funds land in an agent’s account, or a cheque that is no longer a criminal surety will shape your legal position for years.

Mainland, free zone or offshore?

Where you incorporate decides market access, banking, visas and tax. The cheapest licence is rarely the right structure.

• Mainland: trade across the UAE and contract with government bodies; suited to domestic commerce and public projects.
• Free zone: full foreign ownership, faster setup and tax incentives; limits on direct trade in the mainland market.
• Offshore: holding and activity outside the UAE; no licence to operate inside the country.

The practical steps — and the documents that must be right on day one

The path usually runs: name reservation, articles and shareholders’ agreement, premises, licence and establishment card, then a corporate account and Federal Tax Authority registration.

Each step produces a document that is hard to rewrite later. We explain those documents in Persian before signature and draft them in Arabic or English to the same legal standard.

Powers of attorney and the new cheque law

Notarial instruments in the UAE are issued in Arabic or English. The seemingly simple clause ‘proceeds to be paid into the attorney’s account’ is one of the most common abuse routes. Revoking a power of attorney requires notary formalities; a WhatsApp message is not enough.

Under Federal Decree-Law No. 14 of 2020, issuing a cheque without funds is generally no longer a criminal offence unless bad faith is proven. A cheque remains a civil enforcement instrument, but it is no longer an absolute guarantee of payment. The main contract — not the cheque leaf — is what vindicates your rights.