UAE law allowing 100% foreign ownership now in force

By Robert Anderson / Gulf Business


SOURCE: Gulf Business - UAE law allowing 100% foreign ownership now in force

The law establishes ‘positive’ and ‘negative’ lists of sectors open to more than 49 per cent foreign investment

A law allowing 100 per cent foreign ownership of companies in the UAE is now in force after being published in the country’s Official Gazette.

The long-awaited law is designed to make the country more attractive for investors while limiting the impact on local businesses, officials have said.

Foreign companies seeking to establish an entity onshore in the UAE would previously have to team up with a UAE national, who was required town 51 per cent of the shares of the company.

Law firm Clyde & Co confirmed the law’s publication on Sunday afternoon.

Among the key details is a framework allowing the UAE Cabinet to exercise its powers to permit increased levels of foreign ownership, it said.

It also details the steps required of companies to apply to own more than 49 per cent of shares in selected sectors of the economy.

Sectors restricted from 100 per cent foreign ownership appear on a ‘negative list’.


They include:


- Oil exploration and production

- Investigation, security, military (including manufacturing of military weapons, explosives, dress, and equipment)

- Banking and financing activities

- Insurance

- Pilgrimage and Umrah services

- Certain recruitment activities

- Water and electricity provision

- Fishing and related services

- Post, telecommunication and other audio visual services

- Road and air transport

- Printing and publishing

- Commercial agency

- Medical retail (including pharmacies)

- Blood banks, quarantines and venom/poison banks


However, the new law allows the UAE Cabinet to add or remove sectors, Clyde & Co said.

Details of sectors on the positive list, allowing greater levels of foreign investment are not mentioned in the new law, but are expected to include the manufacturing and service industries.

When a sector is added to the list, the cabinet can mandate that a company or its shareholders meet certain requirements before greater foreign investment is allowed.


Clyde & Co said these:


- Mandate the level of foreign ownership permitted in the relevant sector (which could be 100 per cent, but could also be less than 100 per cent)

- Place restrictions or requirements in respect of the type of legal entity which may carry on business in the relevant sector

- Apply minimum capital requirements

- Impose Emiratisation requirements and allow greater levels of foreign ownership than is currently the case in specific emirates (not across the UAE)


Foreign investors that apply for permission to increase their foreign ownership percentage can be rejected but may appeal the decision under the FDI law.

Government bodies established under the new law, the Foreign Direct Investment Unit and Foreign Direct Investment Committee, will administer investment in the country.

UAE Cabinet approves 10-year visas, will allow 100% foreign ownership by year-end

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