How the End of Mandatory Local Sponsorship Reshaped Mainland Setup

For many years, setting up a mainland company in the UAE for most business activities generally required a local UAE national to hold a majority equity stake, commonly structured as a local sponsor or partner arrangement. This requirement shaped how many foreign founders approached mainland registration, often leading them toward free zones specifically to retain full ownership of their company.

Reforms to the UAE's commercial companies framework have since expanded the range of business activities eligible for full foreign ownership on the mainland, removing the local majority ownership requirement for many, though not necessarily all, commercial activities. This has narrowed one of the traditional distinctions between mainland and free zone setup, since full ownership is no longer exclusively a free zone benefit for many types of businesses.

It is worth noting that certain strategically significant sectors may still carry specific ownership or local participation requirements, and the applicable rules can vary depending on the specific business activity and the emirate in which the company is registered. Founders should confirm the current ownership rules for their specific activity with the relevant economic department rather than assuming blanket full ownership applies universally.

For founders weighing mainland versus free zone setup today, this shift means the decision increasingly hinges on factors like market access, target clientele, and operational needs rather than ownership structure alone, since full foreign ownership is now achievable through both pathways for a broad range of business activities.