How to Convert a Free Zone Company to a Mainland Business in the UAE 2025 – Risk Free Complete Guide

If you currently run a company registered in a Free Zone in the UAE, you may soon realize that the advantages of Free Zones — tax benefits, full foreign ownership, simple setup — come with limitations. Many activities, clients, government contracts or mainland‑wide trading require a mainland license. Converting (or rather migrating) your Free Zone business to a mainland entity opens up a full UAE market, access to tenders, and eliminates many restrictions.

In this article, we (Dewey & LeBoeuf LLP) explain how to convert a Free Zone company to a Mainland business in Dubai, Abu Dhabi, Sharjah, or other Emirates, what the process involves, what changed recently (2025), the typical timeline & costs, and how our legal team can help ensure the transition is smooth.

Why shift from Free Zone to Mainland

• Operating in the mainland gives you full access to the UAE’s domestic market: you can contract with local customers, government agencies, public sector clients, and other mainland companies. Free Zone licenses often restrict operations to within the zone or international trade only.
• Mainland licensing enables you to obtain a physical mainland address (office, warehouse, branch) which helps build a stronger presence and legitimacy in places like Dubai, Abu Dhabi, or Sharjah.
• You can apply for government tenders, local distribution, B2C or B2B mainland contracts, and expand operations without geographic limits.
• If your business is growing beyond simple Free Zone‑eligible activities (import/export, consultancy, etc.), a mainland license provides flexibility for a wider set of business activities.

Given these benefits, many business owners find migration to mainland more suitable for growth.

Recent Regulatory Update (2025) — What changed

In 2025, authorities in Dubai introduced a new mechanism allowing Free Zone companies to operate on the mainland without necessarily dissolving the original entity. Under Executive Council Resolution No. 11 of 2025, Free Zone businesses can now:

• Open a mainland branch license under the existing Free Zone company name and retain 100% foreign ownership.
• Use a “temporary permit” for on‑shore projects or limited mainland business for up to six months (renewable), without needing a full new mainland company.
• Operate under a mainland license issued by the relevant authority (e.g. in Dubai, Dubai Department of Economy and Tourism — DET) keeping compliance requirements but with more flexibility.

This update makes migration or expansion to mainland smoother and more attractive, especially for companies that want to keep their Free Zone structure intact but still tap into the on‑shore market.

Step‑by‑Step: How to Move from Free Zone to Mainland

1. Choose your route: branch/permit vs new Mainland entity

You basically have two main options depending on your business goals:

• Branch license under Free Zone company: convert your Free Zone entity into a mainland‑licensed branch. This route benefits from the 2025 resolution, retains 100% ownership, and avoids dissolving the Free Zone company.
• Set up a new Mainland company (LLC, sole establishment, etc.): this is more traditional. You form a new mainland company, transfer assets, contracts, and employees, and optionally deregister or retain the old Free Zone company.

Your legal strategy depends on factors like business activity, whether you require local sponsorship (for restricted sectors), whether you want a fresh license, or you prefer to keep Free Zone as a holding entity.

2. Obtain necessary approvals and documentation

Whichever route you choose, you’ll need to gather and prepare certain documents and approvals:

• Free Zone No Objection Certificate (NOC) — confirms your company is in good standing, all dues paid, no outstanding fines or liabilities.
• Free Zone trade license copy, shareholder passports, visa and Emirates ID copies (if applicable)
• Decide on new business activity under Mainland regulations — commercial trading, services, industrial, etc.
• Choose legal structure: Limited Liability Company (LLC), Sole Establishment, Civil Company, or branch (if converting Free Zone) depending on business type and number of shareholders.
• Reserve new trade name (if needed), or apply under existing name (if allowed) and seek initial approval from relevant authority such as DET (for Dubai mainland).
• Secure an office lease with valid tenancy contract (registered under Ejari for Dubai) — mainland companies cannot operate from virtual or flexi‑desks as commonly allowed in Free Zones.

3. Draft and notarize the Memorandum of Association (MoA)

For a new mainland entity or branch you must draft a MoA specifying business activities, shareholding structure, capital, and other statutory information. Then get it notarized as per local rules.

If required (for certain professional licences or in certain Emirates) you may also need a Local Service Agent (LSA) or local sponsor/local partner. However, thanks to recent regulatory changes, some business activities now allow 100% foreign ownership even on mainland — but this depends on the type of activity.

4. Submit application and get mainland license/permit

Once documentation is ready, submit to the relevant licensing authority (for Dubai mainland, DET / formerly DED). Pay the required license fees. Upon approval you will receive the official mainland trade license or branch license/ permit, allowing you to operate legally on the mainland.

5. Register with labour and immigration authorities if hiring staff

If you plan to hire employees or transfer existing staff, you must register with relevant authorities: Ministry of Human Resources and Emiratisation (MOHRE) for labour cards and General Directorate of Residency and Foreigners Affairs (GDRFA) for residence / visa cards. Free Zone visas must be cancelled before transferring staff to the new entity.

6. Transfer assets, contracts, bank accounts and optionally close Free Zone entity

After mainland license issuance, you should migrate all assets, contracts, inventory, bank accounts and any client service agreements from the Free Zone company to the new mainland entity or branch. Then optionally de‑register or liquidate the Free Zone license (if you no longer need it) to avoid renewal fees. Some companies keep both — Free Zone and Mainland — for different operations (for example, keeping R&D or export operations in a Free Zone branch, while mainland handles on‑shore business).

Cost, Timeframe and Considerations

Typical Timeframe

• Obtaining NOC from Free Zone: 5–10 working days
• Initial approval, trade‑name reservation, MoA drafting, Ejari registration: 3–7 days depending on jurisdiction and office‑space readiness
• Final license or branch/permit issuance: 3–5 days
• Visa transfers, labour/immigration registration, assets/bank transfer: 1–2 weeks depending on number of employees and complexity

Overall, the full migration often takes approximately 2–4 weeks, if all documentation and approvals are in place.

Typical Cost Range

Costs vary widely depending on the emirate, business size, office space, and whether you create a new company or open a branch. As general guidance:

• Branch license / mainland permit (if using Free Zone entity): around AED 10,000–15,000 per year for branch license or approx. AED 5,000 for a 6‑month temporary permit under 2025 regulation.
• New mainland company setup (LLC or similar): license and administrative fees tend to run higher depending on business activity and structure.
• Office rent for an Ejari‑registered lease: mainland office or warehouse costs are often higher than Free Zone flexi‑desk or co‑working spaces.
• Visa processing and labour‑related costs: if transferring existing staff or hiring new staff under mainland operations, expect additional fees per visa/employee.

Also note: on mainland, you become subject to UAE’s corporate and tax compliance regimes (where applicable), including VAT, and possibly corporate tax if profits exceed thresholds under the relevant laws.

Common Pitfalls & What to Watch Out For

• Not properly cancelling or de‑registering the Free Zone license can lead to fines, legal complications, or banking issues.
• Choosing the wrong legal structure (LLC vs branch vs sole establishment) can affect your ownership rights, liabilities, and control.
• Some business activities may require a local sponsor or local service agent, depending on the sector — so ensure compliance with local laws.
• Mainland operations often bring higher ongoing costs (office rent, license renewals, compliance, taxes), so budget carefully.
• For branch‑under‑free‑zone option, you must maintain separate financial and accounting records for mainland and free‑zone operations — mixing them may trigger issues under tax or audit scrutiny.

What this Means for Dubai, Abu Dhabi, Sharjah and Other Emirates

• In Dubai, under the new 2025 resolution, Free Zone companies have a more flexible path: you can open a branch license or temporary permit via DET without setting up an entirely new company. This greatly simplifies access to mainland clients and projects.
• In Abu Dhabi, authorities under Abu Dhabi Department of Economic Development (ADDED) continue to support dual‑licensing or branch license packages for foreign companies expanding into mainland — sometimes with waivers on office space requirements initially.
• In Sharjah and other Northern Emirates, Free Zone companies also have avenues to migrate or extend mainland operations through local licensing authorities (for example Sharjah Economic Development Department if applicable) — but you must check sector‑specific restrictions, local sponsorship rules, and documentation requirements.

The 2025 reforms across the UAE make mainland conversion or expansion more accessible and business‑friendly than before.

How Dewey & LeBoeuf LLP Can Help

As an international law firm with deep regional insight and cross-border expertise, Dewey & LeBoeuf LLP helps clients through every step of this transition. We offer:

• Legal assessment of your existing Free Zone license and business structure
• Advice on the best strategy (branch license, new mainland company, hybrid structure) depending on your needs and business activity
• Preparation and submission of all necessary documentation: NOC, MoA, trade name reservation, Ejari lease registration, license application
• Support with labour and immigration registration, visa transfers and bank account migration
• Post‑migration compliance support, corporate governance, and ongoing regulatory filings

Our experience across Dubai, Abu Dhabi, Sharjah, Singapore, the United Kingdom and beyond means you get global legal expertise combined with local on‑the‑ground knowledge to ensure a smooth, risk‑free transition.

Frequently Asked Questions (FAQ)

Conclusion

Converting or migrating your Free Zone company to a mainland business in the UAE — whether in Dubai, Abu Dhabi, Sharjah or other Emirates — is a strategic decision that can unlock new markets, give you the flexibility to expand, and allow you to engage with local clients and government tenders. The regulatory reforms of 2025 have made this shift more accessible than ever.

However, the process still requires careful planning, documentation, and compliance with local laws. With the right legal partner, you can ensure the transition is smooth, efficient, and compliant.

If you want to explore converting your Free Zone company to a mainland entity, get expert guidance from Dewey & LeBoeuf LLP. Contact us today to schedule a consultation and let our experienced legal team handle the setup, migration, and compliance — so you can focus on growing your business with confidence across the UAE.