100%: the UAE takes another big step towards complete foreign company ownership

09 Jul, 2019 - BCB

When I arrived in the UAE in 2008, talk was already rife of imminent amendments to the country’s corporate laws that would permit majority ownership by foreign firms.  Last week’s announcement of the sectors & activities where this would now be permitted was warmly welcomed by the international business community.  Mid-2018, it was announced that this was being actively developed at a federal level.  At that time, a ‘negative list’ of protected industries was also published outlining the areas where foreign majority ownership would not be permitted, but the all-important ‘positive list’ has been eagerly awaited since then.

In total, 122 economic activities across 13 sectors have now been opened-up for 100% foreign ownership. Some of the most eye-catching amongst these are:

–          Retail

–          Education: primary through to tertiary

–          Healthcare: hospitals, dental & medical clinics

–          Manufacturing

–          Construction & engineering

All of the above industries are big contributors to the UAE economy and already have active overseas participants. So, it will be fascinating to see how current business models change according to the new laws, just as it will be to see the impact this has on fresh FDI flows.

As ever, the devil is in the detail and it will be the implementation of the new laws and transition from the current set up that is crucial.  It appears that the Economic Department in each emirate will have responsibility for this process and is the ultimate arbiter as to which activities & sectors can locally be moved to 100% and how that will work.

Issues such as the impact upon the country’s extensive Free Zone operations (where 100% foreign ownership has previously been the main attraction) and how this will change local sponsorship mechanisms (whereby foreign companies typically have 51% of their shares held by a UAE entity) also needs to be addressed.

What is clear, however, is that these developments will be welcomed by international investors and, along with other business-friendly initiatives, such as the provision of long-term visas the UAE is becoming more active in enhancing its position as Middle East’s pre-eminent commercial hub.

If you are a business looking to expand to the Middle East and would like advice on how to approach your market entry or to find out more about our unique soft-landing Incubator platform please get in touch with us.