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 percent of the population.
If you are an entrepreneur and want to start a company in UAE you have good news. UAE has introduced a new law on 100% ownership. The UAE Ministry of Economy announced that the foreign ownership amendment would be effective on 1 June 2021.
The amendments also removed the requirement for branches of foreign companies in the UAE to appoint a UAE national agent, for most activities. It is no longer mandatory to have a local partner and there are no additional fees, guarantees, or capital requirements for full foreign ownership.
The decision for full ownership for foreign investors enhances the investment attractiveness of the UAE and its advanced position on the global business outlook. The amended law allows natural and legal persons to establish companies without the need for a specific nationality.
The law, however, will not apply to some companies that are excluded based on decisions by the Cabinet and those that are either wholly owned by federal or local governments or their subsidiaries.
With regard to the 100% ownership in UAE you may have the following questions in your mind:
- What is 100% foreign Ownership in UAE?
- What are the benefits of 100% ownership?
- How to invest in 100% ownership?
- Can the existing company amend the license for getting 100% ownership?
- What are the list of 100 % ownership in UAE?
- Can I own a 100% ownership in UAE?
In this article, we have explained the changes that the 100% ownership law entails, which business activities are included and who benefits from it. Any further developments will be posted in due course.
What is 100% foreign Ownership in UAE?
With the effect from June 1, 2021, the UAE has allowed 100% foreign ownership of commercial LLC companies of the Mainland. Foreigners are allowed to establish companies with 100 percent full ownership, based on the provisions of Federal Decree-Law No. 26 of 2020 amending the provisions of Federal Law No. 2 of 2015 on Commercial Companies
The amendments exempt investors from the minimum percentage ownership of UAE nationals and allow the investors to establish a company in mainland Dubai, UAE without the need of a local partner.
In short, 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.
What are the benefits of 100% Ownership?
Under the New Law, the new investors in UAE have a competitive advantage in terms of ease of business establishment and Non-Emiratis of all nationalities can fully own their business as long as it comes in the list of sectors allowed.
The New Law allows the investors to start up a business in a smooth way and attracts business aspirants from around the world to find a home for their business without any unwanted intervention.
It creates a fertile legislative environment for the company establishments and boosts the investment and commercial opportunities in the country.
It allows fewer restrictions, greater ownership opportunities, and a more streamlined incorporation process will inevitably encourage both global corporations and entrepreneurs to invest in the UAE.
Can a foreigner own 100% ownership in UAE?
Yes, for a certain list of commercial and industrial activities foreigners can own 100% ownership and do not need a sponsor in to start a business in UAE as per the new Law. However, some terms and conditions will apply depending on the business activity.
Once the company is formed foreign national will get a partner/investor visa which will be valid for three years. It is not mandatory to stay in UAE all the time. If the net worth of the foreign national is more than AED 10 million he can opt for 10 years visa which can be renewed every 10 years.
How to invest in 100 % ownership?
To obtain a license or amend the Memorandum of Association, investors can log in to ‘Invest in Dubai’. The platform can be used for initial approvals, trade name reservations, and license renewal services.
Foreign nationals still continue paying the same fees to the government for the issuance of a Trade license under 100% ownership and there is no significant share capital required to form a 100% ownership company.
Foreigners are allowed to establish companies with 100 percent full ownership, based on the provisions of Federal Decree-Law No. 26 of 2020 amending the provisions of Federal Law No. 2 of 2015 on Commercial Companies
The law annuls the requirement for commercial companies to have a major Emirati shareholder or agent, thus, providing full foreign ownership to non-Emiratis of all nationalities of onshore companies established by them.
In addition, firms wishing to become joint-stock companies can, after the approval of relevant authorities, sell through IPOs, no more than 70 percent of the company, instead of the earlier 30 percent limit.
Can the existing company amend the license for getting 100% ownership?
The exiting LLC company owner can amend their license by selling the shares of UAE nationals to foreign nationals and become 100% owner of the company. For this to be possible, your LLC needs to be licensed for activities that are on the list released by the relevant company registration authority and you must agree with all existing partners that the foreign partner(s) going forward will be the only partner(s). This may necessitate amending the Memorandum of Association of the company.
If this transfer would result in only one partner remaining, then you also need to apply for a conversion of your LLC into an LLC owned by a single owner (along with the pre-approval for the transfer of shares) at the company registration authority.
All the company shareholders including UAE nationals are required to sign the resolution to amend the license and require approval from the Department of Economic Development Dubai or any other authorities in respective emirates.
If the UAE national disagree for removing his name from the existing LLC foreign national may face multiple legal and arbitration-related option to remove his name from the LLC.
What is the list of 100% ownership activities in the UAE?
As per the new commercial companies law that will come into effect from June 1, 2021, investors can have 100% ownership. UAE allows 100 ownership of the mainland company. Not all kinds of companies will qualify for one hundred percent foreign ownership and every emirate will issue specific guidelines.
Some sectors and activities are specifically excluded from 100% foreign ownership, including commercial agencies; ‘strategic activities, including the military, banking, insurance and re-insurance, and telecommunication sectors; and professional activities such as consultancies. In addition, branches of UAE Freezone companies are still required to appoint a UAE national agent.
Department of Economic Development – Abu Dhabi identifies which non-citizens, whether natural or legal persons have the right to own economic license, establish commercial companies with 100 percent or less ownership and practice these activities in the emirate of Abu Dhabi.
Here is the list of foreign ownership activities for Abu Dhabi https://www.adbc.gov.ae/CitizenAccess/Report/ShowReport.aspx?module=Licenses&reportID=2129&reportType=LINK_REPORT_LIST
As per the guidelines published by Dubai Economy on its website, 100% foreign ownership is available for more than 1,000 commercial and industrial activities excluding economic activities with a strategic impact, which are in seven sectors only.
The full list of activities open for 100% foreign ownership in Dubai can be viewed on: more than 1,000 commercial and industrial activities excluding economic activities with a strategic impact, which relate to seven sectors.
The implementation of the 100% ownership of business varies from one Emirate to another. While the Dubai and Abu Dhabi governments have already updated the guidelines other emirates are also expected to devise their own.
The Ajman DED has confirmed that it has approved over 1,000 activities for 100% foreign ownership, and the Sharjah DED said it would implement its full foreign ownership policy in June 2021, which will also include mainly commercial and industrial activities.
In case you need any further information on 100% foreign ownership you can always hire a business set-up client who assists you to navigate through the process of obtaining 100% foreign-owned business in the UAE.
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