The United Arab Emirates has long been an attractive destination for tourists and businesses alike, with the international business community recognising that the commercial context is highly favourable and becoming more so annually. The UAE has, year upon year, continued to initiate progressive legislation to facilitate foreign business set-up and the degree of external investment which has yielded a prosperous economy whose trajectory is ever upwards. Accordingly, as of 1 June 2021, the amendments made to the UAE Commercial Companies Law by Decree Law No. 26 of 2020 (The ‘Decree Law’), have paved the way for complete foreign ownership of ‘onshore’ LLCs and commercial companies.
Hitherto, Article 10 of the Companies Law has been in effect, mandating that a UAE citizen hold a majority shareholding of 51% in a commercial entity. The amendments permit majority and total foreign ownership by foreign investors whose activities are not subject to restrictions. Specifically, the imposition of any restriction will be by means of a Cabinet Resolution, limiting foreign ownership of companies engaging in endeavours deemed to be of ‘strategic impact.’ Secondly, under the amendments, the individual Emirates comprising the broader UAE are accorded the authority, to regulate company activities by means of their respective Departments of Economic Development (DEDs).
The Abu Dhabi DED has unveiled a list of over 1,100 economic sectors which may be wholly owned by foreign persons and companies. In tandem, the Dubai DED has announced that there will be over 1,000 licensable commercial activities which may be conducted in the Emirate with 100% foreign ownership and with no specific capital thresholds.
The Federal Authorities have likewise made clear that they will consider businesses and business types on a case-by-case basis and that the present roster of permissible fields is to be considered an open canon in the long-term. To enable this, the amendments also remove the requirement for foreign onshore companies to operate with the need for nomination of a UAE national as service agent. Comparably, Cabinet Decision No. 58/2020 (the ‘UBO Decision’), will require that all foreign companies in the UAE, excepting those licensed in free zones and entities nationalised by the UAE authorities will simply be required to devise and publish lists of all registered partners and beneficial owners prior to the 15th of June.
These developments are certain to precipitate an influx of applicants enticed by the opportunities if affords them for their ventures to flourish. Davidson and Co’s legal professionals have vast experience in the UAE context, as well as the expertise and longstanding relations with the national authorities to formalise the legal status of your business in the country.
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