UAE’s New Foreign Ownership Law

The UAE government has passed a law that gives complete ownership of their companies to foreign nationals. By doing so, they have made it easier to launch new business categories independently while also ensuring accelerated business.

Large investments have been approaching in from other countries like India’s Tata group, which is worth $113 billion, and has been opening up numerous Jewelry stores in the UAE.

The new law provides the business a direct link with their customers which ensures smooth communication along with quicker corrections and adjustments. The Titan company is planning to set up at least ten standalone outlets this year alone.

Local ownership in retail business has always been greatly important. Due to this, the new law gave them a significant advantage. With large chunks of business being conducted through digital platforms, they have a lot of room to be flexible while picking their shareholding arrangements.

What’s to come?

The upcoming laws are groundbreaking in the way they’ll bring about ease for business. A lot of businesses have experienced various setbacks due to the global pandemic but this will be a step forward for both already existing and new emerging companies.

The Changes

The amendments of the UAE Federal Law No. 2 of 2015 on Commercial Companies were introduced on 23rd of November, Monday. It states that there is no longer a need for commercial corporations to have a UAE agent or shareholder and they may have full ownership of local companies.

Non-citizens can now fully establish business regardless of their nationality. The current companies have 1 year to adjust to the revised law before it becomes effective. The duration may be extended after a conclusion by the cabinet.

The amended law will be effective from 1st December.

Resolute Action

This new law is inviting new business without any limit. It is similar to the times before the UAE existed when anyone could come and start their business.

FDI Booster

In the UAE Federal Law No. 19 of 2018 on Foreign Direct Investment (FDI Law), foreign shareholders were allowed to own 100% of shares from UAE companies, it also created negative sectors in which this was not permitted, the new law seems to take this to the next step.

The new amendments will increase the UAE’s FDI attractiveness. Due to there no longer being a need to have a UAE shareholder, potential investors will be able to make even larger investments.

Stock Market Boost

The upper boundary of stakes has dramatically increased from 30% to 70%, which will greatly affect the stock market flow.

In February, Aster DM Healthcare got full responsibility for activities in the United Arab Emirates. This incited different organizations in the medical care space to think about their alternatives.

Priority Divisions

The government has set aside three priority areas, or the positive list: manufacturing, agriculture, and services.

The Resolution has set conditions that will be compulsory for corporations to meet. These conditions include; appropriate investment in technology, employee headcount and contribution in development and research. Moreover, specific requirements and approvals are also obtained for certain activities.

The bare minimum investment is set at AED 2 million for manufacturing; in sports productions AED 3 million for manufacturing; AED 100 million for healthcare and AED 20 million for medical and metal equipment manufacturing.

The new law presents a halt from the previous ways business was done in the UAE and is a new way for businesses to succeed.