The UAE government has broadcasted that foreign nationals would be allowed to own 100 percent of commercial companies within the country, eliminating the need for a UAE National to hold the majority share. The amended legislation came into effect 1 June 2021 .
The new rule is anticipated to bring about a fundamental change in how business is conducted in the UAE and attract more foreign investors .
The key points of amended laws as below ;
- There will no longer be a need to have an Emirati national as a majority shareholder (51 per cent) in onshore companies, nor will the company need to have a UAE national or local company as its registered agent.
- A major impact is expected on the liquidity of the local capital market, as companies wishing to go public can now sell up to 70 per cent of their shares in an IPO, instead of the previously applicable limit of 30 per cent.
- The changes will not be applicable to strategically important sectors, such as oil and gas exploration, utilities and transport, as well as to state-owned entities.
- Local authorities such as the Department for Economic Development will be able to regulate participation of Emiratis in companies.
- Fifty-one articles of the Commercial Companies Law are to be amended to facilitate the changes and new articles will be added. Most of the changes are expected to relate to limited liability companies (LLCs) and joint stock companies.
- Federal law by Decree No. 19 of 2018 regarding Foreign Direct Investment is expected to be superseded by these changes, hence, the FDI Law is expected to be repealed.
The mercantile activities in which full ownership is granted include general trade, contracting, jewellery, luxury watches, foods , cars and as well as trucks. Under the industrial category falls metals and construction, flooring, building materials, water production and paint sectors. Education has also been incorporated in the revised amendment.
The UAE government has released the list of 122 categories for 100 percent ownership in the mainland under the Foreign Direct Investment (FDI) Law and this has come into effect from June 1st, 2021. Previously , a foreign investor was permitted to own maximum of 49% shares and at least 51 percent of the shares should be owned by the local sponsor. Hundred percent ownership is assured through the new SME Business Incubator License. Having said that, every submission will be incurred with scrutiny to ensure legal authenticity and feasibility as well as subjected to regulations. Industry domain experts anticipate this new strategy will draw investments both locally and globally.
Foreign investors had to restrict their business operations within the free zones if they wanted 100% ownership which has led to a significant amount of withdrawals in the mainland from overseas capitalists. With this revision in law, we can expect early stage or developing companies to have a convincing impact on their capability to upscale and requisite.
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