As of 1 June, foreigners opening a company in the United Arab Emirates are no longer required to have an Emirati shareholder or agent under significant amendments to the UAE Commercial Companies Law (CCL) that were first announced last November.
Prior to the amendment, Article 10 of the CCL required 51% of the share capital of all UAE onshore companies to be owned by UAE Nationals. Foreign companies that operated through a branch office were required to have a UAE national agent, while the chairman and the majority of members of the board of directors of joint-stock companies were also required to be UAE nationals.
Article 10 has been amended to remove these requirements and now refers to ownership restrictions being continued in respect of companies undertaking activities that have a been determined, by way of Cabinet Resolution, as having “strategic impact”.
Significantly, it is also grants each Emirate’s Department of Economic Development (DED) the power to impose minimum UAE National shareholding levels and board participation for companies incorporated within their jurisdiction.
Both the Abu Dhabi DED and Dubai DED have both released lists of more than 1,000 commercial activities covering a broad range of sectors in which 100% foreign ownership is now permitted. The Dubai DED has also confirmed that minimum share capital requirements will not be imposed on wholly foreign owned companies beyond the standard requirements.
According to the Strategic Impact Resolution (No. 55 of 2021) passed by the UAE Cabinet Resolution, activities with a ‘strategic impact’ are:
- Security, defence and military activities.
- Banks, exchange houses and finance companies.
- Currency printing.
- Haj and Omar services.
- Quran centres.
UAE Minister of Economy Abdulla Bin Touq Al Marri said: “These substantial amendments made to the Commercial Companies Law represent a true translation of the UAE’s vision and directives of its wise leadership to attract foreign investments and develop the national economy to achieve unparalleled growth and leadership; and enhance its competitiveness and resilience in the face of various regional and international developments. This necessitated more open and attractive economic policies for investments that can enhance the economy’s ability to face challenges, continuously generate opportunities and adapt to changes and benefit from them.”
Some have questioned whether these new changes will affect the economic competitiveness of the UAE’s many free zones, which previously allowed 100% foreign ownership. However, the exemption from customs duties and other taxes in the free zones offers significant additional advantages to foreign companies seeking a presence in the UAE.