100% Ownership in the UAE [Explained]
What is new?The Commercial Companies Law No 2 of 2015 has been amended via the Foreign Direct Invest Law (FDI) along with a resolution by the UAE Council of Ministers No 16 of 2020. Therefore, 51 articles have been amended. The revised laws highlight the regulation of provisions of establishing companies with limited liability holdings.
What has changed?Earlier, foreign businessowners were limited to owning a maximum of 49% of their companies. The remaining 51% would mandatorily belong to a UAE national also known as Emirati sponsor or partner. Although, the local sponsor would be a silent partner and charge an agreed yearly fee, foreign businessowners would largely have a tough time finding someone to trust with more than half of their company shares. Only few activities in the professional and services industries and certain free zones allowed expats to have 100% ownership of business in UAE. Now, however, the amendments exempt expatriate investors from the minimum percentage ownership of UAE nationals. Thus, allowing natural and legal persons to establish companies in the UAE Mainland without the need for a local partner. The revised laws will be applicable to several categories of business licenses, including 122 economic activities across 13 sectors under the Positive List. Therefore, foreign investors can now have 100% ownership of business in UAE. Nevertheless, the law will not adhere to some companies that are excluded based on decisions by the Cabinet and those that are either entirely owned by federal or local governments or their subsidiaries.
What is the Positive List for 100% ownership of business in UAE?This is the record of economic sectors and activities eligible for foreign direct investment and percentage of their ownership under the cabinet resolution No 10 of 2020. The list elaborates on the eligible activities as well as the conditions and the minimum investment required for foreigners to have 100% ownership of business in UAE. Below are some of the highlights from the Positive List:
|Sector||Economic activities||Minimum investment||Conditions|
|Cultivating; growing crops, fruits & trees; supporting forestry, and animal production||AED7.5 million||Use modern technology; bring high added-value; contribute in research & development; meet the requirements of licensing entities in the State|
|Supporting activities for crop production||AED10 million|
|Produce goods for industrial, construction, and commercial purposes||AED15 million||Use modern technology; bring high added-value; contribute in research & development; meet the requirements of licensing entities in the State|
|Produce metals, electrical, transport, and medical equipment||AED20 million|
|Provide construction material for aircrafts, motor vehicles, ships, vessels, locomotors, spacecrafts, military transportation equipment||AED100 million|
|Produce sports goods, toys, musical instruments and some others||AED2 million – AED3 million|
|Varied||Most of the payments are in accordance with the existing legislation||Differs from one activity to another|
Why were laws revised to allow 100% ownership?
- Create a fertile legislative environment for the company establishments.
- Facilitating 100% ownership of business in UAE will raise the readiness of the country’s economy
- Improve the ease of doing business
- Help prepare for the future by boosting investment and commercial opportunities
- Raise the competitiveness of the business environment in tune with the rapid economic changes as well as developments taking place in the global economy
- Respond to the evolving needs of the UAE business community
- Give a huge push to the country’s attractiveness to expat investors, businesses and even startups