Full Foreign Ownership

Full Ownership Permitted in the UAE  For Foreign Investors

As a part of the continuous effort of the government to encourage the other nationalities to set up a company and enjoy the conducive legislative environment for business in the United Arab Emirates, a decree overhauling the foreign ownership rules of commercial companies has been issued by President His Highness Sheikh Khalifa bin Zayed Al Nahyan on Nov. 23.

The Federal Direct Investment (FDI) Law which was adopted in September 2018 through Federal Legislative Decree No. 19 of 2018 and an ensuring resolution by the UAE Council of Ministers No. 16 of 2020 in March 2020, amends Commercial Companies Law (CCL) No. 2 of 2015.

Under the New Rules

• Annulment of the old requirements for the commercial company – Aiming to attract foreign capital to the United Arab Emirates, the state annulled the requirement for onshore companies to have an Emirati shareholder. It likewise expands the opportunity for foreign investors to operate a business anywhere in the country.
• Allowing full foreign ownership – Under the existing CCL, the foreign shareholders are limited to own only 49 percent in Limited Liability Company (LLC) operating as an onshore UAE business. The law requires an Emirati individual or 100 percent Emirati-owned company to hold the 51 percent share as a local sponsor.
  As per the Federal Direct Investment Law, an Emirati individual as a sponsor, who is holding the 51 percent of the shares in the company is no longer required in several categories. The need for the local sponsor, which serves as one of the major requirements in setting up a company, has been abolished in the new law. It simply means that businesses can now be fully established by non-Emiratis of all nationalities.
• Level of the Local Authorities – The local authorities remain to be responsible in determining the level of the participation of the Emiratis in any company including the Emirati’s setting up of the capital allocation. The request for approval to establish a new company, except for the joint-stock companies, is also one of the local authorities’ controls.
• Firms turn into Joint Stock Companies –After the approval of the relevant authorities, the firms which are intending to develop into joint-stock companies can now sell as much as 70% of the company through initial public offerings, instead of the current 30%, through IPOs.
• Power of the Shareholders – Now, the shareholders have the power to sue the company in civil court if any failure of duty will result in damages.
  If the senior executives of a company found guilty of fraud or abuse of authority, they can now be removed from the company.
• The Use of Electronic Voting – During the annual general meetings, the use of electronic voting is now permitted under the new amendments.

• 59 investors in Dubai have benefited from the decision so far
  
• No additional fees, guarantees or capital required for full foreign ownership
  
• 100% foreign ownership is available for more than 1,000 commercial and industrial activities
  
• To obtain a licence or amend the Memorandum of Association, investors can log in to ‘Invest in Dubai’
  Branches of foreign companies do not require an Emirati agent