UAE 100% Foreign Ownership: DED Guidance
Dubai Department of Economic Development (Dubai Economy) has published guidelines on the procedures for foreign investors 100% ownership of limited liability companies in Dubai and a list of activates eligible for foreign ownership.
Dubai Economy has started implementing the new decision on foreign ownership effective 1st June 2021, in accordance with the Federal Decree-Law No. (26) of 2020 that amended some provisions of Federal Law No. (2) of 2015 regarding ownership of commercial companies.
Dubai Economy explained that some investors in Dubai have already been able to own 100% of business licenses in a variety of commercial activities. According to the guidelines published by Dubai Economy on its website, 100% foreign ownership is available for more than 1,000 commercial and industrial activities excluding economic activities with a strategic impact, which are in seven sectors only. Please refer to the following link for the activities: Full_Foreign_Ownership_Activities.pdf (ded.ae)
Dubai Economy clarified that the status of these licenses that includes an Emirati majority shareholder remains the same without any change according to the memorandum of association (MoA) of the company and the shareholder’s decision, indicating the possibility of reducing the percentage of the Emirati partner in these licenses. From 51% or his withdrawal from the partnership according to the legal procedures followed t withdraw from the license or modify the proportions of shares of the partners.
It should be noted that the new law does not bring any change to current procedures or requirements for licensing, except that it is no longer mandatory to have an Emirati partner or specify a fixed quota ratio for him/her. The guidelines also state that no additional fees, guarantees, or the capital required for full foreign ownership.
Dubai Economy also explained that it is not possible to convert the legal form of a company from LLC to a Sole Proprietorship under a foreign name as per the existing law. The license can however be transferred to a one-person company with limited liability. Additionally, full ownership does not apply to commercial agencies, as they are regulated by the Commercial Agencies Law.
In light of the above, all companies are advised to seek legal advice to review their constitutional documents, existing structures and whether their contractual arrangements with local nominee shareholders may be terminated to ensure they are able to smoothly transition to 100% ownership.
THINC is at the forefront of these important developments and continues to monitor regulatory updates as they arise. Please contact us if you have any questions or concerns regarding the amendment, its practical implications or you have any questions with respect to structuring your business in the UAE going forward.