On 23 September 2018, enactment of the new federal law on foreign direct investment -- Federal Decree-Law 19 of 2018 (the FDI Law) -- introduced the possibility of majority foreign ownership in UAE companies. While the FDI Law set out a “negative list” of 13 sectors (including insurance, water and electricity, land and airport services, and retail medicine) where existing foreign ownership restrictions would continue to apply, it also referred to a “positive list” that the UAE Cabinet would promulgate to identify economic sectors and activities where up to 100% foreign ownership would be allowed.
Ending speculation, the Cabinet has now acted. The Prime Minister issued a statement on 2 July 2019 announcing the Cabinet’s approval of a positive list of 122 economic activities in sectors such as agriculture, manufacturing, renewable energy, electronic commerce, transportation, arts, construction, and entertainment. The positive list was shortly afterwards published in the local press.
The list of 122 economic activities is divided into 51 industrial activities, 52 service activities and 19 agricultural activities. While allowing up to 100% foreign ownership, the positive list does not do this unconditionally. On the contrary, the positive list imposes additional requirements such as minimum capital requirements on some activities, obligations to employ advanced technology on other activities, and requirements to contribute to the Emiratisation of the workforce on others. For many business and service activities, existing restrictions and qualifications are expressly retained.
Removal of ownership restrictions is not an end in itself, but is a means to attract FDI that will support the nation’s overall development objectives. It is expected that the licensing authorities in each Emirate will ultimately determine the permitted foreign ownership percentages for specific projects. ■