UAE announces reform of foreign ownership and investment laws

One of the biggest trending topics across media in the United Arab Emirates for the past few days has been the announcement of the reform of the current foreign ownership restrictions and the proposal to permit foreign investors to have 100% ownership when establishing ‘onshore’ companies in the UAE Mainland (outside the free zones in which 100% foreign ownership is already permitted).

What has happened?

UAE President His Highness Sheikh Khalifa bin Zayed Al Nahyan issued of a new decree on 23 November to amend the Federal Law No 2 of 2015 on Commercial Companies. Under existing UAE law, foreign shareholders are only permitted to own up to 49% of a locally-registered limited liability or joint stock company, with a UAE national partner (sponsor) holding the 51% majority.

Under the new legislation, which has not yet been published, the UAE will allow 100% ownership of businesses by foreign nationals from 1 December 2020. It is likely, however, that the Department of Economic Development (DED) in most of the Emirates will retain the right to determine the level of UAE national ownership participation in a business or company with certain activities.

How might this affect your set up in the UAE?

We will need to wait for the New Decree to be actually published before we are in a position to assess the impact across all sectors of industry and advise our clients accordingly. We will be following this closely and will provide accurate and up-to-date information as soon as it emerges.

Contact Zana Jablan Musa
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