With effect from 1st December 2020, the UAE has permitted foreign investors 100 percent business ownership, thereby scrapping the need to have UAE nationals as sponsors.
This announcement is in line with the Federal Law issued by President HH Sheikh Khalifa Bin Zayed Al Nahyan, updating the Law No.2 of 2015 regarding companies and their shareholding.
This much-awaited 100 percent ownership by foreign nationals of companies licensed and registered in the UAE is permitted as per Cabinet Resolution No.16 of 2020.
In recent years, individual emirates permitted expat-owned companies to acquire remaining stakes on a case by case basis. However, the latest amendment extends this scope considerably.
The new law amends 51 articles and included new ones, majority of them focusing on regulations regarding establishment of companies with limited liability shareholding. The amendments exempt expat investors from minimum percentage ownership of UAE nationals.
The announcement regarding amendments to the law was made by HH Sheikh Mohammed Bin Rashid Al Maktoum, the Vice President and Prime Minister of the UAE and Ruler of Dubai, who further said that the UAE now enjoys a fertile legislative environment for establishment of businesses in order to improve UAE’s competitiveness.
As per Article No.10 of the amended law, a committee will be formed as per the Cabinet decision and will include representatives from relevant agencies. It will deal with proposals to monitor companies engaged in activities of strategic importance.
The Cabinet will then issue a decision as per the committee’s recommendations to issue regulations licensing such companies.
The key amendment
According to Commercial Companies Law, Law No.2 of 2015, foreign shareholders could own a maximum of 49 percent in a ‘limited liability company (LLC)’ operating as an onshore UAE business. This required either an UAE national or a UAE-owned company to hold the 51 percent balance share as a local sponsor.
However, as per the current amendment, any natural and legal person can establish companies, irrespective of the need for a specific nationality. However, the law will not be applicable to certain companies that are excluded as per the Cabinet decisions and those that are either wholly-owned by Federal Government or local governments, or their subsidiaries.
Welcome move
The UAE Minister of Economy, Abdullah bin Touq Al Marri, said that the new regulation is another new step in a series of efforts taken by the UAE to improve the readiness of national economy, and to prepare for future by further developing commercial and investment opportunities, and increasing competitiveness of the business environment, in line with rapid economic changes and developments happening in the global economy.
