The UAE is one of the fastest growing economies in the world. With an acceleration in its growth, the UAE business community has been competing with other highly developed countries for the same. In order to compete with other countries and win the game, the UAE had to take steps to upgrade its laws and policies in order to enhance its competitiveness among its counterparts.
One of the most important amendments made by the UAE Cabinet is to allow 100% foreign ownership of businesses in the UAE. It’s a game-changing step toward making this region the world’s premier business hub. If you have ever wondered whether it is possible for expats living in the UAE to get a 100% share of their businesses and assets, then you are in for a treat.
What does the new law say about 100% foreign ownership in the UAE?
Key Points in the New Amendment
- It eliminates the requirement that all company registrations in Dubai have a majority of Emirati shareholders and local agents.
- The UAE allows 100% foreign ownership for investors in onshore companies, subject to policies outlined by the cabinet.
- Previously, a joint stock company was not allowed to sell more than 30% of its shares in an initial public offering. With the relaxation of this limit, companies are now able to raise large amounts from investors by selling as much as 70% of their holdings.
- If the directors and managers do something that causes a company to lose money, shareholders may sue those people in court.
- Local governments will have the authority to determine whether foreign companies must meet certain capitalization, shareholding percentage, and establishment approval standards that are set by cabinet resolution policies. Previously, only the Ministry of Economy or economic departments in each Emirate had these powers.
- Companies are no longer required to have Emiratis preside over their meetings; foreigners may chair these gatherings as well.
- Also, the rule barring expatriates from serving on a company’s board of directors has been lifted.
- A global pandemic has made it necessary to hold electronic voting at annual general meetings.
- Company executives or board chairs can be removed from their positions if they overstep their authority.
Why Was the Law of 100% Foreign Ownership in the UAE Implemented?
The law of 100% foreign ownership in the UAE has changed the face of the Emirate and also opened up investment opportunities for entrepreneurs. The government hopes to attract more businesses, start-ups, and skilled professionals by pushing private companies into accessing local marketplaces and helping them reach regional and international markets.
It was one of the initiatives aimed at transforming Emirati society from an oil-reliant economy into an innovation-based, knowledge based economy.
The Emirate has also relaxed other rules, such as allowing businesses to open branches in free zones without having to obtain permission from local authorities and abolishing the requirement of having a local partner for setting up businesses.
- Legislation to encourage foreign businesses to set up in the UAE.
- Eliminating unnecessary bureaucracy is a key to making it easier for companies to do business in the UAE.
- across-the-board improvement of the country’s economy.
- Strategy to prepare for the future by boosting investment and commercial opportunities.
- The global economy is in the midst of many disruptions. To ensure that future economic growth is not jeopardised by these changes,
- Adapting to the changing needs of the UAE business community.
- Make the country more attractive than ever to foreign investors, businesses, conglomerates, and startups.
Who is eligible for 100% foreign ownership of a business in the UAE?
1)- 100% Foreign ownership in Dubai
Of the more than 2,300 total economic activities in Dubai, as listed by the Department of Economic Development (DED), 1,061 will be subject to revised laws. Therefore, approximately half of all business activities can qualify for 100% foreign ownership in Dubai.
In contrast to the UAE’s relaxed rules on foreign ownership for business activities like manufacturing and trading, 100% ownership by foreigners remains prohibited in the professional services sector. Under current regulations, entrepreneurs who wish to initiate a business here must still enter into an agreement with a local service agent and strictly follow the sole establishment structure instead of LLCs.
2)- 100% Foreign ownership in Abu Dhabi
By contrast, in Abu Dhabi, it is still necessary for foreign investors to find an Emirati partner if they want to do business there. This means that foreigners must hold no more than 49 percent of the shares and titles—an arrangement known as a 51-49 shareholding provision. In the UAE, foreign investors must also be mindful of the fact that they are not allowed to own property in Abu Dhabi.
3)- 100% Foreign ownership in Other Emirates
The implementation of 100% ownership of businesses varies from one emirate to another. While some states have already implemented updated regulations, others are also expected to devise their own.
When the new regulations are introduced, foreign investors will be able to own their businesses without restriction.
Al Hadif can help you get the ball rolling on a new business in the UAE at minimal cost. It will guide you through each step of setting up a company with 100% foreign ownership.
We at Al Hadif Business Setup can help you with 100% foreign ownership in the UAE.
Many people are interested in business setup in UAE. But with the lack of professionals and consultants who understand the processes of company formation in the UAE, most entrepreneurs and investors feel confused.
Al Hadif Business Setup is one of the best company formation service providers in the UAE, offering a wide range of services from business registration and incorporation to offshore corporate services. We represent foreign investors and entrepreneurs and help them get started by setting up a local business in the UAE, providing management consulting, and taking care of all their needs.
Moreover, the team at Al Hadif is experienced in helping entrepreneurs and investors, who need to set up a business in the UAE. We can help you figure out the most suitable jurisdiction, trade licence, and corporate structure based on the nature of your business.
We at Al Hadif do not let your business fall prey to any hidden tax, service, or transaction costs. We are in charge of all the legal procedures from start to finish. We help you and your business stay away from legal complications so that you can concentrate on your main job and leave the rest to us.
Since the law regulating 100% foreign ownership of businesses in the UAE is fairly new, various government departments have not yet had a chance to communicate with each other and work together on this issue. If you are interested in obtaining 100% ownership of your company here but feel confused about how to go about it, please schedule a free consultation.
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