Abu Dhabi Company Formation: Complete 2026 Guide

Why Abu Dhabi

Abu Dhabi is the capital and the wealthiest emirate of the UAE. It is not Dubai. This distinction matters for company formation because the licensing authorities, fee structures, free zone options, and regulatory frameworks are distinct. Investors who conflate the two markets misallocate from the start.

The emirate permits 100 percent foreign ownership across most commercial activities on the mainland since the 2021 amendment to the Commercial Companies Law. Free zones have offered full foreign ownership since their inception. Corporate tax stands at 9 percent federally, with qualifying free zone income taxed at 0 percent. There is no personal income tax, no capital gains tax for most investors, and no withholding tax on dividends or interest.

Abu Dhabi’s economy is anchored by sovereign wealth — over $1.5 trillion across ADIA, Mubadala, and ADQ — and ADNOC’s hydrocarbon operations. The private sector opportunity exists in the spaces where these institutions are actively building ecosystems: financial services through ADGM, technology and sustainability through Masdar City, logistics and manufacturing through KIZAD, and media through twofour54.

Step 1: Choose Your Jurisdiction

This is the most consequential decision in the formation process. Each jurisdiction carries different ownership rules, regulatory frameworks, permitted activities, and cost structures.

Mainland (Abu Dhabi Department of Economic Development)

Mainland companies are licensed by the Abu Dhabi Department of Economic Development (ADDED) and can operate anywhere in the emirate without restriction. Since the 2021 reforms, foreign investors can hold 100 percent ownership in most activities, though certain strategic sectors still require Emirati majority ownership or a local service agent.

Best for: Companies that need to trade directly with the Abu Dhabi government, operate across the emirate without geographic restriction, or engage in activities not permitted within free zones.

Key characteristics:

• 100% foreign ownership for most activities
• No restriction on operating location within the emirate
• Eligible for government contracts and tenders
• Subject to 9% federal corporate tax
• Must lease physical office space
• Labour cards issued directly by the Ministry of Human Resources

ADGM (Abu Dhabi Global Market)

ADGM is Abu Dhabi’s international financial centre, located on Al Maryah Island. It operates under its own English common law legal framework — an independent judicial system distinct from UAE civil law. This makes it the preferred jurisdiction for financial services, holding companies, SPVs, and international businesses that require common law legal certainty.

Best for: Financial services firms, holding companies, fintech ventures, fund managers, SPVs, and any business where English common law governance is commercially important.

Key characteristics:

• English common law jurisdiction with independent courts
• 0% corporate tax on qualifying income
• 1,800+ registered entities as of 2025
• SPV formation from $2,750 per year
• Digital assets and crypto regulatory framework
• No requirement for physical office (flexi-desk options available)

KIZAD (Khalifa Industrial Zone Abu Dhabi)

KIZAD is Abu Dhabi’s industrial and logistics free zone, adjacent to Khalifa Port. It is the largest free zone in the emirate by area and is designed for manufacturing, warehousing, logistics, and industrial operations.

Best for: Manufacturing, logistics, warehousing, industrial operations, and businesses that require proximity to port infrastructure.

Key characteristics:

• 100% foreign ownership
• 0% corporate tax on qualifying income
• 0% import and export duties
• Direct access to Khalifa Port
• Large-scale land leases available (up to 50 years)
• Purpose-built industrial and logistics infrastructure

Masdar City Free Zone

Masdar City is Abu Dhabi’s sustainability and clean technology hub. The free zone targets companies operating in renewable energy, clean technology, sustainability consulting, and related sectors.

Best for: Clean technology, renewable energy, sustainability consulting, green manufacturing, and R&D operations.

Key characteristics:

• 100% foreign ownership
• 0% corporate tax on qualifying income
• Purpose-built sustainable infrastructure
• Proximity to Masdar (the clean energy company, now a Mubadala subsidiary)
• Access to sustainability-focused ecosystem and events

twofour54

twofour54 is Abu Dhabi’s media and entertainment free zone, located in Yas Creative Hub. It serves companies in film production, broadcasting, gaming, digital media, advertising, and creative industries.

Best for: Media production, broadcasting, gaming studios, digital content creation, advertising agencies, and creative services.

Key characteristics:

• 100% foreign ownership
• 0% corporate tax on qualifying income
• Production facilities and studios available
• Media-specific licensing and permits
• Access to Abu Dhabi’s film rebate programme

Step 2: Select Your Entity Type

The entity type determines your liability structure, minimum capital requirements, governance obligations, and operational flexibility.

Mainland Entity Types

Limited Liability Company (LLC) — The most common entity for commercial operations. Requires minimum two shareholders (one shareholder LLC now permitted). No minimum capital requirement for most activities. Liability limited to capital contribution.

Sole Establishment — Single-owner entity for individual professionals and small commercial operations. The owner bears unlimited personal liability. Lower formation costs but higher personal risk.

Branch Office — Extension of an existing foreign company. The branch operates under the parent company’s legal identity. Requires a local service agent for certain activities. No separate legal personality.

Civil Company — For professional services (law firms, consultancies, engineering firms). Partners must hold relevant professional qualifications.

Free Zone Entity Types

Free Zone Company (FZC) — Standard corporate entity within a free zone. Single or multiple shareholders. Limited liability.

Free Zone Establishment (FZE) — Single shareholder entity within a free zone. Limited liability.

Branch Office — Extension of an existing company registered in the free zone.

SPV (ADGM specific) — Special Purpose Vehicle for asset holding, structured finance, and corporate structuring. Minimum formation cost and simplified governance.

Step 3: Reserve Your Trade Name

All jurisdictions require trade name reservation before proceeding with formation. The name must not conflict with existing registered names and must comply with naming conventions specific to each authority.

Mainland: Apply through the ADDED portal or TAMM platform. Name reservation typically takes 1-2 business days. Fee: approximately AED 500-1,000.

ADGM: Apply through the ADGM registration portal. Name reservation can be completed same day. Fee: included in registration fee.

Free zones: Apply through the respective free zone authority portal. Processing times vary from same day to 3 business days.

Step 4: Draft Constitutional Documents

Mainland LLC: Requires a Memorandum of Association (MOA) and, for multi-shareholder companies, an Articles of Association (AOA). These must be drafted in Arabic (or bilingual Arabic/English) and notarised. Standard templates are available from ADDED but should be reviewed by legal counsel if shareholders have specific governance requirements.

ADGM: Requires a Memorandum and Articles of Association in English, following common law corporate conventions. ADGM provides standard-form documents that are adequate for straightforward corporate structures.

Free zones: Each free zone has its own standard constitutional documents. Customisation is possible but subject to the free zone authority’s approval.

Step 5: Obtain Initial Approval

Mainland: Submit the application through the TAMM platform with the following documents: completed application form, passport copies of all shareholders and managers, trade name reservation certificate, draft MOA/AOA, and no-objection certificates if applicable. Initial approval typically takes 3-5 business days.

ADGM: Submit the application through the ADGM registration portal with the required KYC documentation. ADGM conducts due diligence on all proposed directors, shareholders, and ultimate beneficial owners. Processing time: 3-10 business days depending on entity type and complexity.

Free zones: Submit through the relevant free zone authority with required documentation. Processing times range from 1-5 business days.

Step 6: Lease Office Space

Mainland: A physical office lease is mandatory. The lease agreement (Tawtheeq registered) serves as proof of business premises for licence issuance. Costs vary substantially by location — from AED 15,000 per year for a basic office in industrial areas to AED 200,000+ for premium commercial space on Al Maryah Island or the Corniche.

ADGM: Offers flexi-desk options for entities that do not require physical presence. Dedicated office space on Al Maryah Island is available through commercial landlords. Virtual office arrangements are sufficient for SPVs and holding companies.

Free zones: Most free zones offer packaged solutions including desk space, shared offices, or warehouse units. Costs are typically bundled with the licence fee or offered as add-on packages.

Step 7: Submit Documents and Pay Fees

Once initial approval is granted and premises are secured, submit the complete documentation package and pay all applicable fees.

Mainland costs:

• Trade licence: AED 10,000-15,000 (varies by activity)
• Registration fees: AED 3,000-5,000
• MOA notarisation: AED 1,000-2,000
• Office lease: AED 15,000+ per year
• Visa deposits: AED 3,000 per visa
• Total estimated: AED 15,000-30,000 (first year, excluding office lease)

ADGM costs:

• SPV registration: $2,750 per year (all-inclusive)
• Standard company: $5,000-10,000 per year depending on type
• Regulated activities (fund management, financial services): $10,000+ plus regulatory fees
• Data Protection registration: $300 per year

KIZAD costs:

• Registration: AED 10,000-15,000
• Licence: AED 10,000-25,000 depending on activity
• Lease: varies by facility type and size

Step 8: Obtain Your Licence

Upon completion of document review and payment, the licensing authority issues the commercial licence. This is the document that permits the entity to commence operations.

Mainland timeline: 2-4 weeks from initial application to licence issuance, assuming all documents are in order and no additional approvals are required from sector-specific regulators.

ADGM timeline: 1-2 weeks for straightforward registrations. Regulated activities requiring Financial Services Regulatory Authority (FSRA) approval may take 3-6 months.

Free zone timeline: 1-3 weeks for standard formations.

Jurisdiction Comparison Table

Recent Regulatory Changes

100 percent foreign ownership (2021): The amendment to the Commercial Companies Law removed the requirement for Emirati majority ownership in mainland LLCs for most commercial activities. This was the single most significant regulatory change for foreign investors in Abu Dhabi’s modern history.

Federal corporate tax (effective June 2023): The UAE introduced a 9 percent corporate tax on taxable income exceeding AED 375,000. Free zone entities pay 0 percent on qualifying income that meets the conditions of the free zone regime. This change fundamentally altered the UAE’s tax proposition, though the rate remains among the lowest globally.

ADGM digital assets framework (updated 2024): ADGM has established itself as a leading jurisdiction for regulated digital asset activities, with a comprehensive framework covering exchanges, custodians, and token issuances.

Beneficial ownership requirements (2023-2024): Enhanced requirements for disclosure of ultimate beneficial owners across all jurisdictions, aligning with international anti-money laundering standards.

Practical Recommendations

For financial services: ADGM is the clear choice. The common law framework, independent courts, and established regulatory regime for financial services make it the only serious option for regulated financial activities in Abu Dhabi.

For manufacturing and logistics: KIZAD offers the infrastructure, port access, and cost structure that mainland locations cannot match.

For technology startups: ADGM or Masdar City, depending on whether the technology is sustainability-focused (Masdar) or financial/general (ADGM).

For general trading and services: Mainland provides the broadest operational flexibility, particularly for companies that need to engage with government clients or operate across the emirate without restriction.

For holding structures: ADGM’s SPV regime offers the lowest-cost, most internationally recognised holding structure available in the emirate. At $2,750 per year with no physical office requirement, it is difficult to beat.