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UAE: 100% foreign ownership in UAE firms starts on June 1


Dubai: The Ministry of Economy announced on Wednesday that the previously announced Commercial Companies Law will come into effect from next June 1. This will allow 100 per cent foreign ownership of onshore [mainland] companies in the UAE.

According to the earlier announcements, all current and previously licensed businesses in the UAE can amend their statuses according to the new amendments to the commercial companies law. In December 2020, the UAE government announced major changes to Federal Commercial Companies Law No.2 of 2015, bringing an overhaul of foreign ownership rules applicable to commercial companies.

What changed?

As per the Commercial Companies Law, Law No. 2 of 2015, foreign shareholders were limited to owning a maximum 49 per cent in a ‘limited liability company’ (LLC) operating as an onshore UAE business. This requires an Emirati individual or 100 per cent Emirati-owned company to hold the balance 51 per cent share as a local sponsor.

In other firms, it was required for foreign businesses of certain categories to have a local service agent (Emirati national) who would not have any shares but would be remunerated as part of the business setup agreement.

The amended law allows natural and legal persons to establish and own 100 per cent stake in their companies, regardless of nationality. The law, however, will not apply to some companies that are excluded based on decisions by the Cabinet and those that are either wholly-owned by federal or local governments or their subsidiaries.

‘UAE is a global investment destination’

Abdulla Bin Touq Al Marri, Minister of Economy, said the amended law is a new step that reflects the importance the UAE government attaches to supporting national economy in its various sectors and enhances its readiness for the future.

“The law comes in line with the UAE’s comprehensive vision to strengthen its position as a global investment destination,” he said.

The minister said the UAE realises the importance of encouraging investors and entrepreneurs as well as their pivotal role in achieving economic development. “We are keen to provide an integrated and flexible investment environment that enables them to implement vital projects that support the national economy,” Al Marri added.

He also said the law supports openness and flexibility in legislation to provide an economic climate in line with the latest and best investment practices. It also eases the setting up and doing business in the UAE and further attracts foreign direct investment in various vital sectors.

The move also aims to raise the attractiveness of investment environment through open and flexible legislation to provide a business- friendly environment in compliance with the best international investment practices, in preparation for the next 50 years.

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