UAE’s New 100% Foreign Ownership Law
What Has Changed and How Does it Benefit You?
The new law allowing 100% foreign ownership of onshore companies is being hailed as a game-changer for the region’s entrepreneurial community and the foreign investment that is expected to come with it. The 100% ownership law was the most significant passed amongst other key financial regulations and reforms that the government introduced to make the UAE the most sought-after country for setting up a business.
The blog will explain the changes that the 100% ownership law entails, which business activities are included, and who benefits from it.
What Changes?
There will no longer be a need to have an Emirati national as a majority shareholder (51 percent) in onshore companies, nor will the company need a UAE national or local company as its registered agent. The new law also allows a Limited Liability Company (LLC) to have a sole owner or multiple shareholders.
Companies wishing to go public can now sell up to 70% of their shares in an IPO, instead of the previously applicable limit of 30%, boosting the liquidity of the local capital market. However, it should be noted that these changes do not apply to strategically important sectors, such as oil and gas exploration, utilities, and transport, and state-owned entities and local authorities such as the Department for Economic Development will be able to regulate the participation of Emiratis in companies.
Which companies are eligible for 100% ownership in the UAE?
Dubai
In Dubai, 1,059 total activities allow 100% ownership, 554 in Trading, and 505 in Industrial activities, leaving the majority of mainstream business that can be owned 100%. Entrepreneurs continue to hold 100% ownership in professional services, requiring a local service agent and following the sole establishment structure instead of the Limited Liability Company (LLC).
To see the full list of business activities, click here
Abu Dhabi
Abu Dhabi has drawn up a list of 1,105 commercial and industrial activities that will allow 100 percent ownership by non-UAE nationals. Owners of existing companies do have the right to adjust their status, provided they comply with the regulations on activities or other applicable restrictions.
To see the full list of business activities, click here
What are the benefits of 100% ownership?
- It reduces overhead company setup costs
- Facilitates ease of doing business for foreign investors
- Provides flexibility of operations for any business wishing to operate anywhere in the country
- A conducive legislative environment for investment
- The amendments open the door to the establishment of more companies by investors of all nationalities.
- Will boost liquidity in local capital markets is a change to companies that wish to go public. A company wishing to become a public joint-stock company after the approval of the relevant authorities can sell no more than 70 percent.
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