Recently, the UAE Government has embraced an amendment in the Commercial Companies Law permitting 100% foreign ownership of firms. As indicated by the UAE Minister of Economy, Abdulla bin Touq Al-Marri – This amendment will boost the country’s competitive edge and facilitate business.
This will permit foreign entrepreneurs & investors to set up and completely have their own onshore companies in the UAE. The amendment will be implemented from 1st June onwards. The revisions will help to show the UAE as an appealing objective for foreign business people, and stakeholders and further reinforce the nation’s power as a worldwide focus of generating income and bring a steady investment stream to indispensable financial sectors in the UAE.
You should know that every foreign-based firm had to adhere to the 49-51 rule in the past, which means Foreign companies set up in the UAE were asked to have 49% expatriate shareholders and 51% of investors from the UAE. The progressions made; are described as a wide extension for the businesses; prohibited are the ones with strategically significant areas, for example, oil and gas, transport and state claimed organisations.
These new changes by the presidential declaration are said to impact 51 articles altogether and present three extra articles in the Commercial Company Law. These critical changes in shareholding ways are:
- The end of the prerequisite for the organizations of UAE to have a dominant part in Emarati Shareholders.
- Permission of full foreign ownership of firms situated on the Mainland of the UAE i.e the onshore firms.
- Because of this worldwide pandemic, the yearly meetings & gatherings are presently permitted to hold online voting.
- Through the methods of IPO, a business entity would now be able to sell 70% of the shares as prior to this amendment, the rate was pretty much as low as only 30 %.
- The gatherings of the firms are not any more needed to be led by an Emirati, it is presently open to Expatriates also.
- In case the company working through its directors and general managers undertakes an activity resulting in the loss of the company, the shareholders have the power to file an application against the company in the court
- In case of abuse of power by the executive officers or the chairs of the company, there is a provision to remove them.
Who is eligible for 100% ownership of the business in the UAE?
In Dubai, the revised laws will be applicable to 1,061 out of the 2,300 total economic activities on the list released by the Department of Economic Development (DED). Therefore, about half the business activities across sectors, including trading and manufacturing, qualify for 100% ownership of the business.
For professional services activities, however, 100% ownership of business continues to benefit the entrepreneurs. They, however, require a local service agent and strictly follow the sole establishment legal structure instead of an LLC
The changes in the law would be fruitful in the long run not just for current financial investors but the new ones too. To appreciate the benefits associated with the new changes, the current investors must restructure their firms. Without hardly lifting a finger for setting up a business, the new financial investors in the market of the UAE have a win-win situation.