BusinessDubaiUAE100% ownership for foreign investors in UAE

UAE’s Economy

The UAE has the second-largest economy in the Middle East after Saudi Arabia, with a GDP of US$354 billion in 2020. The economy remains heavily reliant on revenues from petroleum and natural gas, with more than 85% of the economy based on oil exports.

Since the UAE is a producer of oil and gas, its economy has been greatly affected by the Coronavirus pandemic and the drop in crude oil prices, which prompted the International Monetary Fund to expect the UAE economy to shrink by 6.6 percent in 2020. This has led to severe job cuts in the private sector, forcing many foreign workers to return home due to the lack of employment opportunities in the UAE.

100% Ownership for Foreign Investors in UAE

Under existing laws, all businesses were required to have a UAE citizen as a sponsor, and foreign nationals could own up to 49% of a locally registered company, with the majority of shares (51%) resting in a local partner.

On November 23, 2020, the President of the United Arab Emirates, His Highness Sheikh Khalifa bin Zayed Al Nahyan, issued a decree amending the restrictions on foreign ownership within the Companies Law in the United Arab Emirates. The newly issued decree amended the pertinent provisions of the UAE Federal Law No. 2 of 2015 and supersedes the UAE Federal Law No. 19 of 2018 on Foreign Direct Investment.

Under the amendments to the 2015 Commercial Companies Law, a company is no longer required to be chaired by an Emirati national, and the board of directors need not be majority Emirati. Businesses can now be fully established by non-Emiratis of all nationalities, with companies now having a maximum of one year to comply with the amended law from the time its articles become effective. Simply put, 100% ownership for foreign investors in UAE is now allowed.

Additionally, local authorities can set specific targets for Emiratis in capital allocation and on the board of directors of companies. They can also approve requests to establish companies. Companies can now also sell up to 70% in initial public offerings, up from the current 30%.

These changes reflect the UAE’s vision to open up its economy by creating a favorable legislative environment that will keep pace with global changes and support companies operating in the country.

Liberalizing Business Activity

The series of measures are aimed at liberalizing business activity in the UAE, where almost 80% of the population are foreigners. Current regulations require companies to have 51% of the shareholdings held by locals, which may deter companies from setting up offshore operations in the UAE. With the new set of measures, costs for companies will be reduced, attracting more firms to set up operations in the UAE.

Along with other labor reforms in the country, these measures mean that any aspiring entrepreneur can build operations in the UAE with few constraints in the long term.

Abolishing the need for local partners for offshore companies will set the path for the free zones across UAE, helping satisfy companies that are unable to set up operations in these zones. In the foreseeable future, foreign companies will be more enticed into setting up operations in the UAE, with a more favorable legislative environment. Foreign investments will further boost UAE’s economy amidst the pandemic and falling oil prices.

Who Does This Law Apply To?

The UAE has approved the list of economic sectors eligible for 100% ownership for foreign investors in 122 economic activities in the industrial, agricultural, and services sectors.

His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President, Prime Minister, and Ruler of Dubai, said, “The positive list will take everyone into consideration, and our instructions are to create the best business environment for the local investors and foreign investments, which are the drivers of investment in the country.”

Virtual Visa Scheme

Recently, Dubai launched a virtual visa scheme, allowing remote working professionals from all over the world to relocate to Dubai with their families and access all services in the emirate, including schooling, telecom, and other services.

The program allows remote workers and their families to relocate, on an annual basis, to Dubai to avail themselves of its lifestyle amenities and strong digital infrastructure. Foreign nationals can work from Dubai without a local employment contract and benefit from the emirate’s digital infrastructure and its location as a travel hub in the Middle East.

Retire in Dubai

In September, the emirate launched a retirement program for resident expatriates and foreigners over the age of 55. The “Retire in Dubai” scheme allows eligible residents aged 55 and over to apply for a retirement visa that would be renewable every five years. Helal Saeed Al-Marri, Dubai Tourism’s director general, said it was launched to “further enhance Dubai’s position as an iconic global city and make it the world’s most preferred lifestyle destination.” The retirement program will contribute to the tourism economy by facilitating frequent visits from families and friends of the retirees and increasing visitation from markets with a high retiree population.

Dubai Virtual Company License

Dubai has also recently launched the Virtual Company License, which allows global businesses to access a regulated e-commerce platform populated by Dubai-based companies, while also exploring new markets and investment opportunities digitally.

The virtual company license is a joint initiative of Dubai Economy, Dubai International Financial Centre, General Directorate of Residency and Foreigners Affairs, Smart Dubai, and Supreme Legislation Committee. The license enables investors and freelancers from all around the world to set up their businesses without having to stay in the UAE. It covers sectors such as technology, media & entertainment, creative sectors, and various service sectors.

UAE Business Set Up

If you are a businessman or foreign investor looking to leverage 100% ownership for foreign investors in UAE, Tetra Consultants will be in pole position to assist you with UAE business setup. Our team will assist you with company registration, corporate bank account opening, and application of licenses (if required).

Even though it is easier to register a UAE company, it is still important for you to understand the other regulatory requirements to stay compliant in UAE. Other considerations such as paid-up capital, license requirements, and corporate banking solutions should be taken into account before proceeding with overseas business setup.

Contact us now for a free non-obligatory consultation, and we will be in touch within 24 hours.