Foreign investors are permitted to own 100% of businesses in the United Arab Emirates.
Last year, the government announced revisions to foreign ownership restrictions on companies in the UAE.
These revisions are part of Federal Decree-Law no. (26) of 2020, which amends certain provisions of Federal Law no. (2) of 2015 on Commercial Companies.
The alterations to foreign ownership regulations will grant foreign investors the ability to hold full ownership of businesses in the UAE. The Ministry of Economy of the UAE anticipates that these changes will stimulate greater foreign investment and enhance economic growth within the country.
Businesses engaging in activities deemed to have a strategic impact will remain subject to foreign ownership limitations.
It is expected that the Cabinet will issue a decision delineating which industries are classified as strategic and the extent to which foreign ownership will be permitted.
The UAE government has delegated the authority to enact decisions on foreign ownership restrictions to each Emirate. While this may appear arbitrary, it is a deliberate move to grant each Emirate autonomy in determining its approach to foreign ownership, resulting in varying approaches across different Emirates.
All companies operating in the UAE, including limited liability companies, are required to adhere to new corporate governance standards currently being developed by the government and slated for release at a later date.
The revised procedure for convening general meetings empowers shareholders to request a meeting be convened at any time by collectively holding at least 10% of the share capital. A notice period of 21 days must be provided before the meeting takes place. Additionally, modern technological methods may be employed for convening and conducting meetings.
These changes represent a significant shift for existing companies.
The extent to which foreign ownership restrictions will be lifted remains uncertain. Similarly, the process for phasing out the National Service Agent (NSA) or Local Partner, and the practical advantages beyond the required activities list, remain unclear.
New companies were mandated to comply with the new laws starting January 2021. Existing companies have until January 2022 to adjust their structures. For instance, companies with Memorandums of Association featuring different quorum, notice, and meeting requirements from those outlined in the Amendment should amend their Memorandums of Association to align with the Amendment by January 2022.
SETUPDEAL is committed to empowering entrepreneurs. Leveraging our extensive industry experience and vast network of contacts, we stand ready to support the growth of your business.
As experts in transitioning to 100% foreign ownership, SETUPDEAL provides comprehensive services to facilitate a seamless transition.
We can assist with Annual General Meetings (AGMs) and heightened corporate governance obligations by managing all aspects of your company’s share transfers, NSA terminations, and other processes.
Additionally, SETUPDEAL can aid in reviewing and updating your company’s Memorandum of Association (MOA) to ensure compliance with the changes introduced by the Amendment.
