Foreign Business Owners to have Unconditional Ownership in the UAE
The UAE has taken yet another progressive step towards becoming one of the most desirable destinations for business owners and investors as foreign business owners no longer require an Emirati holding 51% of the shares in their mainland LLCs. This historical amendment to the 2015 Commercial Companies Law undoubtedly translates into a skyrocketing of the nation’s competitive advantage in the global market as the UAE Minister of Economy, Abdullah bin Touq Al Marri, explained that “the new decree is an additional step in a series of efforts that the UAE is taking to raise the readiness of the national economy and prepare for the future by developing commercial and investment opportunities and increasing the competitiveness of the business environment”.
The previous 2018 amendments allowed for 100% foreign ownership under numerous conditions, however, all the conditions in the latest amendment have not been declared as yet, only the fact that the energy and hydrocarbons, telecommunications and transportation industries are exempt. Therefore, numerous questions still remain unanswered including foremost: are there any other levels of exempted categories the new law applies to, what are the conditions of exit of the Emirati shareholder, whether the exit is compulsory or at the discretion of the Emirati/foreign shareholder and whether the Emirati exit would mean an introduction of a compulsory requirement for PRO services for government related matters such as immigration and labour. Another matter of concern would be the financial implications of the Emirati exit and whether the share sale would incur payment from the foreign shareholder. The answers will become clear over the course of the coming months.
Despite the lack of clarity at this point, it is important to recognize the necessary part the new decree plays in preparing the nation for a stable post-COVID19 recovery. Enhancing the UAE’s attractiveness and competitiveness as a top tier global hub for a diverse selection of industries can only bring positive results.