Non- UAE citizens can fully own businesses in the Country – A law that is going to boost the economy.
The UAE has announced changes to laws surrounding business ownership and commerce in the country. This has been implemented this year to make the UAE more expat-friendly and to open up the country to business and foreign investment to boost the local economy. President HH Sheikh Khalifa bin Zayed Al Nahyan has issued a decree overruling foreign ownership rules for commercial companies and will enter into force on June 1, 2021.
This might be called the new dawn for the country’s business community, the implementation of the amendments now allows ex-pats to have 100% ownership of the business in UAE.
Free Zone entities in the UAE remain unaffected by this change since foreign ownership has been the norm there since their inception.
A big move for the UAE
The strategic decision for full ownership for foreign investors enhances the investment attractiveness of the UAE and its advanced position in the global business outlook. The decision will accelerate the UAE’s economic recovery and add to the gains the country has made so far. It will also help further enhance UAE’s already high rankings in international investment indicators and leading global indices related to ease of doing business and business expansion.
What is new?
The revised laws highlight the regulation of provisions for establishing commercial companies with limited liability structures. A Limited Liability Company (LLC) can have a single owner or multiple shareholders.
What has changed?
Earlier, expat business owners were limited to owning a maximum of 49% of their companies. The remaining 51% would mandatorily belong to a UAE national or an Emirati sponsor or partner. Only a few activities in the professional services sectors and certain free zones allowed expats to have 100% ownership of a business in the UAE.
Now, however, the amendments exempt expat investors from the minimum percentage ownership of UAE nationals. Thus, allowing natural and legal persons to establish companies in the UAE mainland without the need for a local partner.
Who is eligible for 100% ownership of the business in UAE?
In UAE, the revised laws will apply to nearly half of the total economic activities on the list released by the Department of Economic Development. Therefore, about half the business activities across sectors, including trading and manufacturing, qualify for 100% ownership of the business. For professional service activities, 100% ownership of the business continues to benefit the entrepreneurs. However, they require a local service agent and strictly follow the sole establishment legal structure instead of an LLC. The implementation of 100% ownership of business varies from one Emirate to another.
The latest guidelines issued by Dubai Economy also state there are no additional fees, guarantees, or capital requirements for full foreign ownership. In addition to that, a reduction of the percentage share of the Emirati partner from 51 percent or his /her withdrawal from the partnership is possible according to the legal procedures followed. However, the status of existing business licenses that include an Emirati partner remains unchanged. This is as per the Memorandum of Association (MOA) and the partners’ decision.
The changes are part of a series of measures introduced to make the UAE a more investment-friendly destination. It also improves the ease of doing business and gives a huge push to the country’s attractiveness to expat investors, businesses, and even startups. Moreover, by taking away the legal imperative of allocating the controlling interest in a mainland entity to the local partner, the recent relaxation of foreign ownership has the potential to place the foreign investor-local partner relationship on a more sound economic footing. When the partnership is based on an arms-length agreement as to the relative value each partner brings to the table, the venture is more likely to succeed in a competitive market.
For any of our services, Contact Us
