Understanding Free Zones: What Are They?

The free zones in UAE are specific geographic areas within the country that function under a distinct framework of economic and business incentives that is separate from the rest of their governing domains.

These zones actively foster the growth of business and industry, spur foreign investment, create jobs, promote trade, and encourage economic diversification.

Free zones in UAE are an integral part of The Abu Dhabi Economic Vision 2030, a strategic plan launched in November 2008, which provides a solid foundation to diversify the Emirate’s economy and transform the capital into a thriving global hub.

The initiative seeks to drive both long-term economic growth and a sustainable, diversified economy.

Free Zones in Abu Dhabi

General

The ADAFZ covers several airport locations in Abu Dhabi and provides diverse free zone facilities, business parks, logistics hubs, and business centers. Offering businesses a strategic location, it operates out of Abu Dhabi International Airport, Al Ain International Airport, and Al Bateen Executive Airport, all with world-class infrastructure.

Moreover, this ADAFZ is regulated by free zone law UAE that outlines the rules and regulations to govern the operations here thus ensuring business growth.

Permitted Activities

Please note that this list is not exhaustive. Lest you be overwhelmed by the idea of starting your own business, ADDFZ will customize every aspect of your new business requirements to set up a business in the ADAFZ:

• Aircraft interiors, aviation, aerospace; airport services; aircraft charter
• Import and export
• Airlines owe catering and flight support services
• Transportation, warehousing, distribution, and storage of goods
• Events marketing and management
• Maintenance and Repair Organization (MRO)
• Regional headquarters operations
• Service providers and consultancy firms
• Technology and ICT solutions
• Trading, assembly, and manufacturing

By establishing a presence in ADAFZ, companies gain access to a dynamic business environment with streamlined regulations under the free zone law UAE, ensuring numerous growth opportunities.

Types of Entities Allowed

ADAFZ allows you to create limited liability companies (LLCs) and branches, offering flexibility for various free zone business structures in the UAE.

Other Key Considerations

ADAFZ share capital requirements depend on the chosen business activity also the type of shareholder, corporate or natural person.

For corporate shareholders, AED 500,000 (US$136,000); for individual shareholders, AED 1,000,000 (US$273,000) for LLCs in aerospace, airport services, aviation, and manufacturing.

The minimum capital for LLCs in other industries is AED 150,000 (approximately US$40,800).

Branch companies: There are no fixed capital requirements.

(ADAFZ may revise these requirements at any time.)

Additionally, ADAFZ mandates that companies operate within free zones in UAE with at least one shareholder, one director, and a general manager.

Abu Dhabi Global Market (ADGM): A Leading Hub in Free Zones in UAE

General

ADGM is a financial free zone created in late 2015 and works under a common law jurisdiction. Its laws are derived from the common law of England and Wales. Being the most recent addition to the Abu Dhabi free zone landscape, ADGM is the only financial free zone in Abu Dhabi. It also has its own courts, the ADGM Courts, which hear commercial cases with ADGM companies, as well as others that choose to ‘opt-in.’

Permitted Activities

ADGM offers a wide spectrum of financial and non-financial activities including:

• Money-related activities: i.e. banking, financial advising, investment advising, trust services, fintech, etc.
• Non-financial: Industries like manufacturing, civil engineering, hotels, real estate, legal and accounting services, advertising, marketing, consulting, education, and social work.
• Retail activities: The zone supports the manufacturing and retail of products like food, beverages, and jewelry, as well as setting up retail stalls.

Thus, ADGM offers a dynamic environment for businesses across various sectors within UAE free zones.

Permitted Entities

ADGM also allows for the formation of different legal structures, ranging from business vehicles to free zone corporations in the UAE. These include:

Private limited companies (like limited liability companies) and special-purpose vehicles

Foundations

Private Companies Limited by Guarantee (i.e. Associations)

Public companies

Foreign companies and branches of partnerships

The various forms of partnerships, including limited partnerships and limited liability partnerships

Protected cell and incorporated cell companies are examples of cell companies

Investment companies

Other Key Considerations

The ADGM law includes provisions for the use of trust instruments, which must meet ADGM’s trust law provisions, which mirror charitable trust-based UK trust laws with specific amendments. One of these facilities is in harmony with the free zone law UAE.

ADGM companies do not have a minimum share capital requirement. However, they must have at least one shareholder, one authorized signatory, and one director. While appointing a company secretary is optional for private companies, additional requirements may apply if the company operates in the financial sector and is regulated by ADGM’s Financial Services Regulatory Authority (FSRA).

Conclusion

Free zones play an important role in the economic growth and diversification of the UAE, particularly in Abu Dhabi. Under free zone law in UAE, such zones offer tailored incentives and personalized regulations that attract a diverse pool of enterprises.

ADAFZ provides a flexible structure with no minimum capital requirement and is home to various industries, including aviation, technology, finance, and manufacturing, as does ADGM. Such zones are a pivotal part of UAE’s economic vision allowing both local and international investors to flourish.