Maintenance of a UAE Company In Line With New Regulations
Previously, one of the signature aspects of the UAE Foreign Ownership law was that 100% foreign ownership was not allowed, with Article 10 of the Commercial Companies law stating that “one or more UAE partners holding at least 51% of the share capital of the company” was mandatory. What does this mean? Well, foreign investors were only able to hold a maximum of 49% of the company, which was not the most attractive option for many. However, in early 2021, this changed and speaking generally, the need for a majority-holding UAE partner is no longer. In addition, it is no longer necessary to have a UAE national service agent appointed as part of foreign companies.
Here are the three main changes that the Commercial Companies Law now reflects:
No need for a UAE national service agent
100% foreign ownership available in certain industries
No need for UAE nationals on joint stock companies’ Board of Directors
"The amended Commercial Companies Law aims at boosting the country's competitive edge and is a part of UAE government efforts to facilitate doing business," said Minister of Economy Abdulla bin Touq Al Marri. The UAE rose four spots in the 2021 Kearney FDI Confidence Index, showing that foreign investment in the UAE is growing and this new regulation will help attract people to the ever-successful UAE market.
So what do these changes mean for your company? Let’s discuss. Towards the middle of 2021, certain UAE emirates released lists of the industries that qualify for 100% foreign ownership. Please note that the 100% foreign ownership does not apply to all businesses and due to the recent decision, these lists may change over time. Although there were some industries that did qualify for 100% foreign ownership before this change in the law, the list was small. The UAE has now added more than 100 categories of businesses to the positive list, opening the door for foreign investors to take advantage of the UAE’s growing economy.
Additionally, they vary by Emirate, so make sure to consult the list for each Emirate. In Dubai, some qualifying industries are contracting, transportation, and investment and trade; in Abu Dhabi, however, hospitals and maintenance and repair make the list. To ensure that you know where your company falls, make sure you check each list for the full selection.
The new regulations went into effect on June 1, 2021 and you can already start taking advantage of them. Here’s some key information:
Your company no longer needs a UAE national service agent, so you can give your agent notice and move forward without one.
As long as your company is on the list of the acceptable industries where 100% foreign ownership is possible, you can begin the process of switching shares from UAE nationals to yourself or other foreign investors.
To switch shares, you will need to have documents notarised that affirm your company’s place in the qualifying industry.
Your joint stock company doesn’t have to have a UAE national on its Board of Directors anymore, which opens up the possibility for more diverse and varied expertise for future members.
Although the new regulations are complex and subject to change in the future, this is a huge step for foreign investors looking to take advantage of the attractive UAE economy. If you’re ready to take the next step and transform your company by either incorporating it in the UAE or changing your company ownership structure to include the new regulations, don’t hesitate to reach out to us. At Europe Emirates Group, we are committed to helping you make the most out of your foreign investment.
CEO, Europe Emirates Group