Following the enactment of the UAE Federal Law No. 19 of 2018 on Foreign Direct Investment, The Ministry of Economy announced 100 percent foreign ownership of onshore companies in the UAE, which came into effect by 1 June 2021. It means foreigners of any nationality can now own 100 percent of their business in the country. And UAE is becoming a more investment-friendly destination.

BACKGROUND:

  • Currently, foreign investors can hold up to 49% of the share-capital in an onshore company, while the remaining 51% must be held by a UAE national or a company wholly owned by UAE nationals.

MAJOR HIGHLIGHTS:

The major change occurred is that Investors no longer need to be concerned with negotiating or entering into agreements with UAE sponsors, to hold 51 percent of a new company’s issued share capital.

  • The amendment is applicable to new and existing companies.
  • As of June 1, 2021, the 51% – 49% rule is no longer required.
  • It is applicable to onshore limited liability companies (LLCs) as well as onshore branches and representative offices of foreign companies.
  • Existing companies are granted a grace period of one year, from the date the Decree comes into effect, to implement any changes.
  • The amendment also included the offer of 10-year visas for investors and citizenship for talented individuals.
  • The economic activities to be involved in the business are specifically mentioned by the cabinet as a Positive List and those excluded as negative list like defence, oil and gas and certain other activities.

The amendment decree is a welcome development for sure and is a milestone that will have a great impact on the UAE economy. It increases the competitiveness and open up as an investment hub for the international entrepreneurs. Through this amendment UAE is focusing on a long-term growth that will encourage more foreign investment into the country, increased ease of doing business, and lower start-up costs. The country is expecting an immense growth in the investment in modern technologies and an increased contribution to research and development.

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