LegalNew law regarding FULL FOREIGN OWNERSHIP of onshore companies in UAE, its ADVANTAGES and SECTORS it applies to.

May 23, 2021
Article (1) of Federal Decree – Law No. 26 dated 27/09/2020

Full foreign ownership of companies in UAE.

One of the most significant changes introduced by the Decree Law is the abolishment of the general requirement for Emirati majority participation in companies and branches of foreign companies in the UAE (so-called 49-51- rule).

Furthermore, Art. 6 of the Decree Law has also abolished Federal Decree Law No. 19 of 2018 on Foreign Direct Investment. This means in fact, that there is no general requirement for an Emirati shareholder in a limited liability company (“LLC(s)”) anymore.

However, the respective Department of Economic Development may decide on activities of strategic importance which would then again require a certain percentage of Emirati participation – either in the share capital or the management of the LLC.

At first, Article (10) was amended by virtue of Article (1) of Federal Decree – Law No. 18/2017 dated 19/09/2017, then it was replaced by virtue of Article (1) of Federal Decree – Law No. 26 dated 27/09/2020.

Positive Aspects

Below are some Positive Aspects of the amendment, which will take effect from June 1.

  • To begin with, An FDI positive rule always attracts new foreign investors from across the globe who sees growth potential in the much sought after Middle Eastern market.
  • Furthermore, Economic activities will grow with the aid of overseas investment and talent.
  • This move will also increase global competitiveness. while the law applies to all the Emirates, the local governments can decide the actual foreign ownership percentage, which can be up to 100% if need be.

In conclusion, the new foreign ownership rule will reaffirm the UAE’s global position as an emerging market and a global hub for foreign investment. Alongwith, the country is also looking forward to building positive commercial diplomacy with other nations.

Sectors where the law applies

Specifically, the recent announcement from the Cabinet came out with a positive list of 122 economic activities across different sectors.

These include the following sectors:

  • Agriculture
  • Renewable energy
  • Food and hospitality services
  • Healthcare industry
  • Storage and transportation
  • Product manufacturing
  • Civil Construction
  • IT and communication
  • Space technology
  • Scientific activities
  • Administration and support
  • Education
  • Art and entertainment industry

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Full foreign Ownership of companies in UAE
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