100% foreign ownership in the UAE

22 Sep, 2022 - BCB

Now that the amendment has passed, we are expecting more foreign investment to come in. What this means is that, more foreign investors will have the opportunity to enjoy 100% of shares in a company.

Previous requirements for 51% of the company share to be held by the Mainland company, owned by the UAE national, or individual UAE national(s), has been removed. Now, according to Dubai Economy and Tourism Department (DET), definition of business activities with full ownership in emirates of Dubai and Abu Dhabi, there are 1,105 activities available in Abu Dhabi and 1,059 activities available in Dubai.

Perhaps the best news is that the new law does not oblige companies to replace their UAE-National partners, so there is no need for an individual to change their business structure. As far as ownership goes, nothing will change with respect to license requirements. Moreover, there are no new fees required for 100% ownership. If one wishes to reduce or withdraw a local partner’s share in the company, it is possible to amend your license as per legal procedures with the consent of both parties.

In Dubai, the requirement for minimum share capital of the company has been reduced to AED 100,000 from previously established AED 150,000. Despite these requirements, there is no actual proof of payment needed as a below market fee is paid to Dubai Economy and Tourism Department (DET) on establishment of the LLC.

So, getting started as a company based in the UAE has never been as easy as nowadays to enter the Middle East Market. However, laws regarding commercial agencies and branches of foreign companies are slightly different, with one having less requirements than the other. A new era is coming to the UAE as the country seeks to attract more FDI. This will involve a re-definition of the economic ground rules, which in turn may require Free Zones to take action.

From a legal perspective, full ownership would be beneficial in the long run. However, from an economic perspective, it would be a waste of resources if there is no immediate need for control of the companies or assets to be purchased. As the UAE financial sector continues to expand and grow, commercial opportunities will become available, and this may allow for more direct foreign investment.