Business Setup

Can a free zone company legally operate in the Dubai Mainland? One of the most common questions we hear is this: The short answer is yes, but the confusion arises as we look more closely at the details. Let’s break it down.

Who regulates business in the Dubai Mainland?

The Department of Economic Development DED is the authority responsible for issuing licenses for all business activities conducted in the Dubai Mainland. Any company or individual operating outside a free zone must hold a DED license. This applies regardless of whether the parent company is based in the UAE or abroad.

Over the years, DED has streamlined its procedures significantly. In practice, licensing through DED is often faster and less restrictive than many free zones, while still offering strong regulatory clarity.

Law No. 13 of 2011: What it really means

In 2011, Dubai issued Law No. 13 to regulate economic activities in the emirate. This law opened the door for free zone entities to establish branches in the Dubai Mainland.

What the law did not do was allow free zone companies to operate freely in the mainland without a DED license.

That misunderstanding still circulates today, but the law is clear:
No entity may conduct economic activities in the Dubai Mainland without being licensed by DED. Violations can result in fines of up to AED 100,000.

How a free zone company can operate in the Dubai Mainland

A free zone entity that wants to do business in the Dubai Mainland must establish a DED-licensed presence. The most common legal structures are:

1. Civil Work Company

This structure is used for professional activities. It can be owned 100 percent by foreign individuals or foreign corporate entities, including free zone companies, provided the activities align.

A UAE local service agent must be appointed. The agent has no ownership or profit share and carries no financial liability.

2. Limited Liability Company LLC

In this case, a UAE national or a company fully owned by UAE nationals must legally hold at least 51 percent of the shares. This structure is commonly used for commercial activities.

3. Branch of a Free Zone Company

A branch is fully owned by the free zone parent company and operates under the same trade name. A local service agent is generally required, unless the parent entity is owned 51 percent or more by UAE nationals, in which case the Ministry of Economy may grant an exemption.

The local service agent has no role in management, profits, or assets. Their role is purely administrative.

Activity restrictions you need to know

While Law No. 13 does not explicitly list permitted or restricted activities, practical limitations apply.

Branches of free zone companies must register with both DED and the Ministry of Economy. The Ministry of Economy does not permit certain activities to be conducted by a branch in the Dubai Mainland, including:

• Trading activities
• Commercial agency activities
• Labour supply services
• Restaurants

This is a critical point. Even if DED approval is obtained, Ministry of Economy restrictions can still apply.

Key requirements to open a branch

Setting up a branch of a free zone company in the Dubai Mainland involves both DED and the Ministry of Economy.

Typical requirements include:

• Initial approval and trade name certificate from DED
• Notarised corporate documents of the free zone entity
• Board resolution approving the branch and appointing a general manager
• Power of attorney for the general manager
• Passport copies of the general manager and local service agent
• Notarised local service agent agreement
• Ministry of Economy fee of AED 15,000

Bank guarantee of AED 50,000 in favour of the Ministry of Economy

What this means for investors

The Dubai Mainland offers unmatched access to the local market, government contracts, and a wider range of commercial opportunities. Law No. 13 of 2011 made it possible for free zone companies to access this market legally, but only through the correct structure and approvals.

The opportunity is real, but so are the restrictions. Choosing the wrong structure or activity can lead to delays, rejections, or penalties.

Final thoughts

Operating in the Dubai Mainland through a free zone entity is entirely possible and, in many cases, strategically smart. The key is understanding that a free zone license alone is not enough. With the right legal structure, proper approvals, and a clear understanding of permitted activities, free zone companies can expand confidently into the Dubai Mainland.

At Gulf Central, we help businesses choose the right setup from day one, avoiding costly mistakes and ensuring full compliance at every stage.

Thinking about expanding into the Dubai Mainland?
Before you move, make sure your structure, license, and activities are aligned with DED and Ministry of Economy requirements. The right setup saves time, money, and future headaches.

Talk to Gulf Central for clear guidance and end-to-end support in setting up your Dubai Mainland presence the right way, from day one.