UAE Allows 100% Foreign Ownership of Onshore Companies

May 20, 2021

By easing the process of doing business in the UAE, the government aims to create a win-win situation for all.

In a bid to make UAE a global investment hub, the government took a landmark decision by allowing foreign nationals to own 100% ownership of their UAE-based companies. Earlier, foreign nationals were allowed to hold a maximum of 49% stake in a UAE-registered LLC. In comparison, the remaining 51% stakes were to be owned by an Emirati individual or a company 100% owned by an Emirati. According to investors, it was one of the biggest hurdles that made them reconsider their decision to set up a company in UAE, which now stands resolved.

How Will the New Amendment Impact Investors?

Law No.2 of 2015 of the UAE’s Commercial Companies Law required foreign investors to set up a registered LLC only if the said company has 51% shares held by an individual Emirati or a company 100% owned by an Emirati. In other firms of select categories, foreign investors were required to take the help of a local service agent (Emirati national) to set up the company. In this case, it was compulsory by law to pay the service agent according to the business setup agreement. The payment would be in monetary terms and not shares.

But as Abdulla Bin Touq Al Marri, UAE’s Minister of Economy, announced amendments in the Commercial Companies Law, the conditions mentioned above are no longer valid.

So if you wish to set up and run a company from UAE, you no longer need an Emirati as a major shareholder or as a service agent.

The amendment has now made it easier than ever to set up, run, and manage a company in UAE.

The changes, however, don’t apply to companies that are wholly owned by federal or local UAE governments or their subsidiaries. Banking, insurance, labor & recruitment, telecom, commercial agency, oil and gas, and military are some of the industries where the new amendment promoting 100% foreign ownership won’t be applicable. The immediate beneficiaries of this change are expected to be new businesses. Existing foreign investors should wait till 1^st June for the Ministry of Economy to release guidelines helping them convert the current business into 100% foreign-owned.

Changes to Create a Win-Win Situation for All

By easing the process of doing business in the UAE, the government aims to create a win-win situation for all. The openness and flexibility in legislation will encourage investors worldwide to set up businesses in UAE. It will give them easy access to tap into the local market and create employment opportunities for the locals. As COVID-19 has affected the business ecosystem, the new amendment comes as a breath of fresh air.

This move by the government is expected to infuse life into the country’s economy by making it a leading global hub of investment.

With the upcoming Expo 2020 and global economy recovering post COVID pandemic, this move by the government will attract international firms and entrepreneurs looking for investment opportunities in progressive countries like the UAE, that provides world class infrastructure and high-quality lifestyle making it the leading global hub for investments.

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