The UAE News web report: Foreign investors can now fully own companies on the mainland without the need for an Emirati sponsor. This follows a decree by His Highness Sheikh Khalifa bin Zayed Al Nahyan, President of the UAE.
Companies that want to open branches in the UAE can also do so without a local sponsor, according to the decree.
The new decree comes as a step to improve the position of the UAE regionally and globally as an attractive destination for investments and projects.
These reforms are expected to attract foreign investment to the UAE, and the decree also amended 51 articles of the foreign ownership law of 2015.
These measures could reduce costs and improve the ease of doing business in the country. With these changes, it is not mandatory to have an Emirati to be the chairperson of a company. The board of directors also need not have an Emirati majority.
However, companies in sectors that are deemed strategic, like oil and gas, utility and transport, and strategic sectors, are exempt from these changes.
Under the Commercial Companies Law No. 2 of 2015, foreign shareholders could own a maximum 49 per cent of a company on the mainland. An Emirati individual or company could hold the remaining 51 per cent.The Foreign Direct Investment Law, Decree No 19 of 2018, however, laid out plans to ease restrictions on foreign ownership.
Imran Khan, the Dubai-based legal consultant, appreciated the new law and said, “The UAE government in time of COVID-19 issued a new cabinet resolution and amended company establishment law and permitted that a non-Emarati person can establish a company in the mainland without the partnership with a UAE Citizen with certain conditions.”
This Cabinet Resolution No. 16 of 2020 is a new kind of amendment of previously passed FDI Law 2018 and now in this new resolution, a list of sector-wise activity has been added as well as minimum capital investment requirement in addition to other FDI conditions.
Mr. Khan said, “This is an admirable initiative for foreign investors. It will increase the comfort level as well as provide more protection to their investments. However, the involvement of a minimum capital clause is there, therefore, yet not market fully open for 100% for all. It will certainly encourage free zones companies to establish their businesses on the mainland.”