How UAE free zone businesses can operate in the mainland – New laws explained

Dubai: The UAE, which unveiled sweeping changes to its Commercial Companies Law in October last year, clarified that the new laws make it significantly easier for businesses to move between free zones and the mainland.

The UAE’s Ministry of Economy and Tourism also introduced multiple share classes and laws that allow businesses to operate as non-profit commercial companies, as part of a major push to attract the next wave of global investors, startups, and social enterprises.

The amendments, as explained by the Minister of Economy and Tourism, Abdulla bin Touq Al Marri, earlier this week, are expected to increase company registrations by 10–15 per cent in the first year and support the country’s goal of reaching two million companies by the end of the decade.

Free zone to mainland

Companies can now transfer their registration between emirates, free zones and financial free zones without liquidation. Until now, firms moving from places such as DIFC or ADGM to the mainland had to shut down, lose their operating history and start again as a “new” company.

Hassan Al Kilani, Principal Legal Adviser at the Ministry of Economy and Tourism, told Gulf News that the change removes one of the biggest structural barriers for long-established firms.

“Previously, if you wanted to move from a free zone to the mainland, you had to cancel everything, liquidate the company and start as a newborn entity. Even if you had been operating for 10 or 20 years, you lost your entire history,” he said. “Now, you can relocate your commercial registry, and your company’s lifetime continues.”

Under the new rules, companies retain their legal identity, contracts, and obligations, with no need to reincorporate. Commercial history and track record are preserved, allowing firms to expand across the UAE without disruption.

“This gives companies incorporated in free zones the flexibility to operate onshore, as long as the licensing authority permits it,” Al Kilani said. “From a business perspective, this is a very powerful change.”

Open onshore branches

Free zone and financial free zone companies are now allowed to set up branches or representative offices on the mainland, subject to licensing approval. This allows professional services firms, tech companies, consultancies and holding companies to serve the wider UAE market without changing their core structure.

“Previously, the law referred to issuing a Cabinet resolution to regulate this matter,” Al Kilani said. “Now, if the licensing authority allows you to operate onshore, you are welcome to do so. It is much clearer and much more practical.”

Non-profit commercial companies

The UAE has also introduced a new legal model – the non-profit commercial company. These entities do not distribute profits to shareholders; they reinvest all earnings into their mission and can be structured as LLCs or private or public joint-stock companies.

Al Kilani said this opens the door for a new category of mission-driven businesses. “This is a very modern concept. The idea is that you can have a commercial company, but the profits are reinvested into the expansion of the business instead of being distributed,” he said. “It is particularly suitable for sectors like education, healthcare, innovation and social impact.”

He added that specific regulations will be issued for non-profit commercial companies, providing tailored rules rather than treating them as conventional for-profit firms. “It will not be subject to the same rules and regulations as a normal LLC. It will be tailor-made, with extra agility,” he said.

The legal overhaul comes as the UAE continues to post strong economic and tourism growth. Nearly 250,000 new companies were registered in 2025, taking the total to more than 1.4 million. Tourism’s contribution to GDP has reached 15 per cent, while non-oil sectors now account for 77.5 per cent of the economy. The Ministry expects overall growth of 5 per cent in 2025.

Bin Touq said the amendments are part of a proactive legislative approach. “We believe these amendments will represent a qualitative leap in corporate governance and business regulation in the UAE,” he said. “They create new attraction factors for local and foreign companies and investments in line with global best practices.”