The UAE cabinet had recently adopted an amendment to the commercial companies act that allows for hundred per cent foreign ownership of companies in the UAE. These changes are now in effect starting from June 1 ,2021, onwards. Announcing the changes, the UAE Minister of Economy, Abdulla Bin Touq Al Marri stated, ‘The amended Commercial Companies Law aims at boosting the country’s competitive edge and is a part of UAE government efforts to facilitate doing business. The new changes were introduced by the Federal Decree-Law No. (26) of 2020 that amended some provisions of Federal Law No. (2) of 2015 on +commercial companies.
The Dubai Economy has now issued its clarifications for the procedures required for effecting the hundred per cent ownership change in accordance with the Federal Decree-Law no. 26 of 2020.
New updates related to the hundred per cent foreign ownership:
- Hundred per cent foreign ownership has been approved for more than 1000 commercial and industrial licenses.
- No additional fees are applicable for requesting the changes to be effected on existing trade licenses.
- No additional capital is required in order to effect these changes on existing trade licenses.
- Full foreign ownership is not allowed for ‘professional licenses’ in the UAE.
- In addition to a hundred per cent foreign ownership in the mainland companies in the UAE, the branches of foreign companies in the UAE are now exempted from the requirement of appointing a ‘National Service Agent’ (NSA).
- Commercial activities for which hundred per cent foreign ownership is now allowed in the UAE include amongst others the business segments of, ‘general trading’, ‘gold’, ‘pearls’, ‘jewellery’, ‘cars’, ‘luxury watches’, ‘food’ etc.
- Industrial activities for which hundred per cent foreign ownership is now allowed in the UAE include amongst others the industrial segments of ‘construction’, ‘building materials’, ‘water production’, ‘paint’, ‘food’, ‘flooring’, ‘flooring metal’.
- With the new changes, the steps for either a reduction of the share capital of the Emirati partner or full withdrawal of the Emirati partner can be affected on the trade license of the company.
- Limited liability company can be converted to single-person ownership with limited liability structure along with hundred per cent foreign ownership.
The UAE has been at the forefront of developing innovative measures to attract the best talent and entrepreneurs to the region, the latest in a series of measures aims at liberalizing business in the UAE, where foreigners make up more than eighty per cent of the population.
Dubai had also recently introduced the ‘Virtual Company Licensed’, which allows global companies to access a regulated e-commerce platform populated by Dubai-based companies while digitally exploring new markets and investment opportunities. The Latest decision seeks to accelerate the UAE’s economic progress and to add to the gains the country has made so far. These strategic decisions enhance the investment attractiveness of the UAE and its advanced position on the global business map, while also reinforcing the competitive advantages that UAE enjoys as an ideal investment destination.