No Restriction to Have Local Shareholder

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Yes, you read it correctly! UAE government, in line with the New Foreign Direct Investment Law (Federal Law Number 19 of 2018) has finally announced the relaxation for almost 122 business activities to hold 100% foreign ownership in the mainland companies. The list of business activities is mainly for companies dealing in the business of manufacturing products, offering services or in the agricultural sector. Upon the promulgation of this list by UAE Cabinet, every Department of Economic Development (DED) in the relevant Emirate have been empowered with explicit discretion to ascertain the percentage of foreign ownership in particular business activity. This clearly states that the foreign owner will be not be authorized to apply for 100% ownership automatically as it will be decided by DED.

Although it all seems to be good news, yet there are certain prerequisites for the applicant to be followed in accordance with the UAE Cabinet guidelines. Ergo, all investors willing to possess 100% ownership shall follow the below-mentioned conditions prior to filing an application before their respected DED:

  1.  The relevant company shall have a minimum share capital which will be decided by DED, and the company shall maintain that capital;
  2.  Construction industries are explicitly restricted to handle large-scale projects;
  3.  The mandate for companies under that list to connect with Tawteen Partners Club requiring entities to maintain certain targets of Ministry of Emiratisation and Human Resources (MOHRE);
  4.  Conditions on Agricultural companies to use modern technology for their business.

Typically, DED is working on the case to case basis as there is no critical guideline for them to offer a certain percentage to the foreign owner. Importantly, any business activity qualifying for attaining 100% foreign ownership shall have a local sponsor or a service agent. The local agent can be a UAE national or a company wholly owned by a UAE national. Another significant fact for existing companies applying for seeking 100% ownership, there are several conditions which need to be followed, and for seeking this information, you must seek the assistance of Corporate Lawyers in Dubai.

The promulgation of this Cabinet decision has shed some light on how foreign owners can seek 100% or more than 49% ownership, yet the decision has left several spots for the respected DED to regulate foreign ownership in their own Emirate. Nevertheless, more clarity on this situation is always welcome for foreign owners to prepare themselves before filing an application for claiming higher ownership in mainland companies.

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