UAE Gov. New Rule Offers 100% Ownership Of The Companies Established By Foreign Investors

UAE’s Cabinet announced that business activities are eligible for cent percent foreign ownership last week. With the ultimate aim of seeking investment from countries abroad and to ensure job opportunities for citizens there, this announcement was made. Sheikh Mohammed bin Rashid, Prime Minister of UAE tweeted stating that the goal is to open and expand economic sectors to attract new investors and cement the global competitiveness of the national economy.

This was a pretty long anticipated and widely discussed FDI law in UAE for quite a long time. This new law has made amendments for 51 articles of CCL and then added new ones focusing on the provisions of established companies with limited liability and shareholdings.

Before this decision, foreign investors could hold up to 49 percent of ownership for a company registered in UAE. If it was for a designated free trade zone, the foreign investor should have to have partnered with UAE citizens who would hold the remaining 51 percent. Entrepreneurs and investors are now allowed to fully establish and own companies without any requirements of nationality.

The only condition that it has for a foreign company wishing to open a branch in the country to have an agent from among the country’s citizens needed to be canceled. This decision came into effectiveness after when new foreign investment law in 2018 got approved which allowed foreigners to own up to cent percent of some businesses.

Economists, residents, and commercial people across UAE have welcomed this decision believing that this decision will further help to measure to liberalize and strengthen the investment environment which will be a critical step for the development of new sectors and industries. It is further believed that it will help in rapid job creation across UAE.

It has been believed that the major impact would be over the liquidity of the local capital market as the companies can now go public and sell up to 70 percent of their shares under the Initial Public offering Scheme. This was previously limited to only 30 percent. However, local authorities like the Department of Economic Development will be regulating the participation of Emiratis in the companies thereby.

This decision will not only help in the promotion of business activities within the territory but rather increase the possibility for UAE to be a commercial hub across Asia, Europe, Africa, and America. The internal revenue is supposed to rise which will ultimately turn UAE into an economically prosperous nation.

Businesses like e-commerce transport, supply chain, logistics along cold storage are believed to gain new shape under logistics and storage activities. Similarly, professional, scientific, and technical activities will also get enhanced after the implementation hereby.

This decision was believed to come out back in early 2019 itself. UAE is the 17th easy nation for doing business as per The World Bank’s data under Ease of Doing Business 2020. And, it had set a target to top the World Bank’s ease of doing business list by 2021. Further, it has been believed that further guidelines on how these changes will be applied into practice are yet to be made public.

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