UAE’s foreign investors and company owners can enjoy 100% ownership from June 2021
The UAE recently took another step towards enhancing its business infrastructure by announcing significant amendments to the Commercial Companies Law in the UAE. The new law in the UAE allows 100% ownership of companies for foreign investors and entrepreneurs. The Ministry of Economy has announced that this 100% foreign ownership in the UAE will come into effect from 1st June 2021.
The landmark changes to the 100% UAE foreign ownership laws will help attract foreign investors and entrepreneurs and further improve the ease of doing business in the country.
Learn all about the new amendments to the UAE commercial companies law and what it means for foreign business owners.
What are the new UAE 100% foreign ownership laws?
In November 2020, H.H. Sheikh Khalifa bin Zayed Al Nahyan, President of the UAE, issued a decree that significantly amended the UAE Federal Law No. 2 of 2015 on Commercial Companies.
From 1st June 2021, non-Emirati individuals of all nationalities can fully establish onshore companies in the country, allowing 100% foreign ownership in the UAE of such businesses. This removes the requirement for commercial companies in the UAE to have an Emirati shareholder or agent.
“The amended Commercial Companies Law aims at boosting the country’s competitive edge and is a part of UAE government efforts to facilitate doing business,” Minister of Economy Abdulla bin Touq Al Marri said as part of an official statement.
As per the earlier announcements, companies can change their status according to the new amendments to the UAE Commercial Companies Law.
Previously, the jointly owned property law in Dubai was also changed allowing different individuals to buy a property together.
What changed in the UAE 100% company ownership law?
Under the UAE commercial companies law, Law No.2 of 2015, all onshore companies were required to have a UAE National or Emirati-owned company as a partner or sponsor. Foreign shareholders were allowed to own up to 49% of a limited liability company (LLC), while the local sponsor holds the 51% majority.
According to the Emirates News Agency (WAM), the new UAE company rules have annulled the need for a local sponsor for companies operating as an onshore UAE business. These amendments also supersede the Foreign Direct Investment Law (FDI Law) of 2018. The FDI Law had allowed 100% foreign ownership of businesses of certain categories, on a case-by-case basis.
By announcing this new 100% foreign ownership of companies in the UAE into effect from the 1st of June, the UAE has taken yet another step to establish itself as a global leader.
What were the other amendments announced by the UAE Government?
The new decree issued by the President of the UAE amended 51 articles of the commercial companies law of 2015 and introduced three completely new articles. While the new laws have removed the need for an Emirati shareholder and agent, the local authorities have been granted the power to determine the percentage of Emiratis in capital allocation and boards of directors for companies.
There were also other provisions for joint-stock companies and limited liability companies announced as part of the new decree. As per the new laws, firms that receive approval to become joint-stock companies from the relevant authorities can sell up to 70% of the company through IPOs (initial public offering). This is an increase from the 30% that is currently allowed for joint-stock companies.
Other amendments included the permission to use electronic voting in general assembly meetings, as well as the appointment of board members who are not stakeholders. As per the new commercial company laws in the UAE, the chairman and board members of companies can now be dismissed if they are found guilty of fraud or misuse of power. Furthermore, stakeholders can now sue a company for damages due to the latter’s failure to perform their duties.
Finally, the UAE Cabinet has been authorised to form a new committee to determine activities of ‘strategic impact’ and specify the measures and procedures needed to licence such companies.
These new UAE commercial company laws 2020 will help to enhance the legislative environment, and encourage more foreign investment in the country. It follows a slew of other landmark changes to existing laws in recent years, such as the introduction of long-term visas in the UAE, as well as the opening of the freehold market in Abu Dhabi. In fact, many well-known celebrities and thought leaders have also received the Golden Visa lately.
By opening up the economy to more investors and entrepreneurs with 100% foreign ownership in the UAE, there is also likely to be an increased interest in the property market, as more people look to make the UAE their permanent home. The emirate’s strategic location, world-class lifestyle and favourable business environment make it a desired destination.
FREQUENTLY ASKED QUESTIONS
Can expats get 100% foreign ownership in the UAE?
Yes, as per this new law, expats and foreign investors both benefit from 100% ownership in UAE.
Can expats rent offices in Dubai?
Yes, expats can lease out commercial properties in Dubai. Here are some of the other popular areas where you can rent commercial properties in Dubai.
Can foreign investors buy property in Dubai?
Yes, both residing expats and non-residents can buy property in Dubai. There are designated zones, called the freehold areas in Dubai, where foreign nationals can invest. Also, there are several benefits for foreigners to buy property in Dubai, including competitive prices, high rental yields, etc.
If you a company owner planning to take advantage of the new 100% ownership in Dubai mainland, there are also plenty of areas to buy commercial property in Dubai.
How can I start a business in Dubai?
First, you need to determine the legal entity of your business and then apply for the relevant licence in the emirate. There are different types of business licences in Dubai for different industries. It’s also a good idea to hire business consultants in Dubai for assistance with the various legal and financial procedures. Additionally, if you are new to the process, take a look at this step-by-step guide to setting up a business in Dubai.
That concludes our guide to the new 100% foreign ownership laws in the UAE! Those looking to establish a business in the UAE should be aware that different laws and processes govern the set-up of companies in each emirate.
Here’s a list of free zone areas in Dubai and the free trade zones in Abu Dhabi, each catering to particular sectors and industries. These free zones offer various incentives to both local and foreign companies.
Stay tuned to MyBayut for more updates on the latest laws in the UAE!
