100% Foreign Ownership in the UAE (Ultimate Guide)
The latest revisions to the Commercial Companies Law (CCL) will allow foreign nationals to acquire up to 100% of a company based in the United Arab Emirates (UAE) starting on June 1, 2021.
100% Foreign Ownership in the UAE
This blog will go deeply into the implications of the recent reforms for UAE business owners and the economy as a whole. Recent legislation in the UAE allows for full foreign ownership, marking a significant step toward establishing the country as the global economic center of choice.
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Ownership of LLCs
Provisions enabling the formation of limited liability corporations for business purposes are the focus of the new laws. LLCs can be owned by a single person or by several different people who act as shareholders.
Ownership laws used to be different in the past
Previously, foreign nationals were only allowed to hold 49% of a corporation. A citizen of the United Arab Emirates, usually known as an Emirati sponsor or partner, must hold the remaining 51%.
In the United Arab Emirates, foreigners could only own 100% of businesses in select free zones and in the professional services sector.
However, with the new regulations in place, international investors no longer need to have a minimum shareholding by UAE locals. Thus, both natural and legal people can set up businesses in the UAE mainland independently of a UAE national.
This means that with the help of a local service agent (LSA), international nationals can own a wholly-owned subsidiary in the UAE. Without taking ownership in the business, an LSA can assist with licensing and paperwork. As a result, the responsibility for making choices is with you.
Eligibility for 100% Ownership of Business in the UAE
Out of the 2,300 economic activities listed by Dubai’s Department of Economic Development (DED), only 1,061 will be subject to the new regulations. Thus, approximately 50% of all businesses across all sectors (including commerce and manufacturing) are eligible for 100% ownership.
However, foreign investors in the UAE continue to reap rewards from a 100% ownership structure, at least in the realm of professional services. A local service agent is necessary, and the sole establishment legal structure is adhered to rather to an LLC.
In the meanwhile, investors in Abu Dhabi still need an Emirati sponsor in order to set up the vast bulk of trading activity. This means they have to adhere to the 51-49 shareholding rule.
Different Emirates have different policies regarding who can own a firm outright. While Dubai and Abu Dhabi have implemented the new rules, similar legislation in other states is expected. Once the relevant countries have implemented the necessary rules, overseas investors will have full ownership of their company. For a little fee, ReCorporate acts as your silent business partner, guiding you through the steps necessary to establish a company in the UAE with 100% foreign ownership.
100% Business Ownership (Why were the changes made?)
- Plant the legislative seeds for future business growth.
- The economic preparedness of the United Arab Emirates would improve if company ownership restrictions were lifted.
- Make it simpler to do business in the UAE.
- Facilitate future readiness by expanding business and investment opportunities.
- Improve the business climate to keep up with the fast-paced changes and advancements in the global economy.
- Keep up with the demands of the commercial sector in the UAE.
- Increase the country’s appeal to foreign investors, corporations, and new companies.
- Allow foreign investors full authority over all aspects of their enterprises, both legally and practically.
- Bring in entrepreneurs from all over the world by advertising the UAE’s policy of 100% foreign ownership.
Over time, governments realized the importance of fostering entrepreneurship and business growth to boost economic development. This led lawmakers to revise regulations to create a more business-friendly environment.
One key change was allowing 100% foreign ownership of companies in many industries. Previously, foreign investors could only own partial stakes in local firms or had to partner with domestic entities. The reforms removed these restrictions to encourage more foreign direct investment, capital inflows, and sharing of knowledge/technology.
Allowing full foreign ownership provided several benefits. It gave foreign companies direct control over their local operations without relying on local partners. It reduced the compliance burden of complex joint venture rules. And it signaled the country was open for business and welcoming of foreign capital.
The new rules enabled faster establishment of wholly owned subsidiaries and joint ventures. With full ownership rights, multinational corporations were more willing to invest in factories, innovation centers, and other facilities. This accelerated business development and job creation.
The increase in foreign investment and business activity supported broader economic growth objectives. It boosted productivity, created skilled jobs, and helped integrate the country deeper into global supply chains. The ownership reforms were part of a broader package of pro-business policies aimed at enhancing the nation’s competitiveness.
While concerns were raised about foreign control, the reforms overall achieved their aims of spurring business growth, upgrading industries, and modernizing the economy through global integration. Allowing 100% foreign ownership removed barriers and helped position the country as an attractive destination for international business investment.
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Business Setup in Dubai with 100% Ownership with ReCorporate
Since its inception in 2001, ReCorporate Business Setup has been at the forefront of assisting new business owners both domestically and abroad with company creation. Over the course of its twenty years in operation, ReCorporate has planted the seeds of success for over 35,000 companies through its tailored business strategies.
ReCorporate handles all the steps and formalities so that businesses don’t have to worry about the legal procedures, from assisting entrepreneurs in determining the most appropriate jurisdiction, trade license, and corporate structure based on the nature of their business, to obtaining all required documents and approvals from various government agencies for the issuance of visa and license.
The United Arab Emirates’ (UAE) new policy allowing foreign investors to hold 100% of a company is a groundbreaking development with the potential to upend the corporate business world. We at ReCorporate notify you of the latest updates to the Federal Commercial Companies Law (CCL) that have been made possible by the government of the UAE. We also evaluate your business plan and make suggestions to make it possible for foreign investors to acquire a hundred percent of your company.
It will also take some time for the various government agencies to fully integrate with the new law. Consult with ReCorporate’s firm Setup Experts for free to find out how to get full ownership of a firm in the UAE and how to avoid any pitfalls along the way.