Foreign nationals can now own 100% of companies within the onshore jurisdiction of the UAE, which previously required 51% Emirati ownership to do business outside of UAE free zones. This remarkable development is expected to further enhance the UAE’s position as the Gulf’s premier business hub and a stronger magnet for foreign capital and investment. The move is expected to support the continued growth of the UAE as it becomes a more robust, vibrant and diverse economy and place to do business.
On 23 November 2020, the President of the United Arab Emirates, His Highness Sheikh Khalifa bin Zayed Al Nahyan issued a decree amending the restrictions on foreign ownership within the Companies Law in the United Arab Emirates. The newly issued decree amended the pertinent provisions of the UAE Federal Law No. 2 of 2015 and supersedes the UAE Federal Law No. 19 of 2018 on Foreign Direct Investment (FDI Law).
Notable key changes include:
- The annulment of the requirement for commercial companies to have a majority Emirati shareholder or agent.
- Allowing full foreign ownership of onshore companies in certain commercial activities in accordance with the policies set by the UAE Cabinet.
- Granting related local authorities (such as without limiting Ministry of Economy and Economic Department of each Emirate) powers to determine the required capitalization, shareholding percentages and approval for establishment of onshore companies in accordance with the policies set by the UAE Cabinet.
- Increasing shares of joint stock companies from 30% to 70% that can be sold via IPO.
- Enabling shareholders to sue the company in civil court over any failure of duty that results in damages.
- Electronic voting available for general assembly meeting.
The UAE Cabinet is authorized by this decree to establish a committee to classify the commercial activities and the required measures and arrangements for businesses onshore that can be fully foreign owned.
Al Suwaidi & Company’s Corporate & Commercial practice is continuing to monitor further legal developments. We shall advise our clients as and when further information and details are released regarding foreign ownership and foreign direct investment into the UAE.