Dubai, United Arab Emirates – Foreigners who open a company in the United Arab Emirates will no longer need an Emirati shareholder or agent under changes to the UAE Companies Law that will come into effect on June 1.
The UAE last year announced a law allowing 100% foreign ownership of companies – one of several moves aimed at attracting investment and foreigners to the Gulf state, which has been hit hard by the coronavirus crisis.
A previous foreign investment law in 2018 allowed foreigners to own up to 100% of some businesses, and foreigners can actually own up to 100% of those registered in certain business parks known as “free zones.”
The UAE Commercial Companies Law (“CCL”) has now been amended to allow 100% foreign ownership of companies incorporated in the UAE under the Commercial Companies Law, otherwise known as “inside” companies (“domestic companies”). The UAE Ministry of Economy announced that the Foreign Ownership Amendment will become effective on June 1, 2021. The requirement that at least 51% of the shares in an internal company owned by one or more Emirati nationals, whether they are natural persons, has been abolished. . or two legal entities, from Article 10 of the Commercial Companies Law. Foreign ownership restrictions are a major concern for foreign investors, including private equity and venture capital funds, and cause additional complexity and barriers to investing in local businesses. Foreign investors may now own and control the internal companies without the need to appoint a candidate or similar structures, thus avoiding onerous arrangements, additional costs and legal uncertainty. Furthermore, entities with single shareholders, which were to be wholly owned by UAE nationals, are now eligible to be 100% owned by foreign investors.
Foreign ownership restrictions remain in relation to companies carrying out activities of strategic importance, as determined by the UAE Cabinet. Companies that engage in such activities will be subject to local ownership and participation in the board of directors conditions set by the UAE Cabinet.
We at Saif Al Shamsi Advocates and Legal Consultants office expect that this amended Commercial Companies Law will enhance the UAE’s position as an international investment destination. It remains to be seen whether the free zones in the UAE will decline in popularity among foreign investors as a result.
For more information, please contact us: saifalshamsiadvo.com