100% foreign ownership is allowed in the United Arab Emirates.
The government has last year announced changes to foreign ownership restrictions on companies in the UAE.
These changes are part of Federal Decree-Law no. (26) of 2020, which amends some provisions of the Federal Law no. (2) of 2015 on Commercial Companies.
The changes to foreign ownership rules will allow foreign investors to own 100% of businesses in the UAE. The UAE’s Ministry of Economy is hoping that these changes will encourage more foreign investment and improve economic growth in the country.
Companies carrying out activities that have a strategic impact will continue to be subject to foreign ownership restrictions.
It is anticipated that the Cabinet will issue a decision outlining which industries are considered strategic and how much of a company can be foreign-owned.
The UAE government has given the power to issue decisions on foreign ownership restrictions to each Emirate. While this may seem arbitrary, it’s actually a strategic move to give each Emirate autonomy over how it wants to handle foreign ownership, and will result in different approaches to foreign ownership in different Emirates.
All companies in the UAE, including limited liability companies, must follow new corporate governance standards that are in development by the government and will be released at a later date.
The new process for calling general meetings enables shareholders to request a meeting be called at any time by holding at least 10% of the share capital. A notice period of 21 days must be given before the meeting is held. In addition, modern means of technology may be used to call and hold meetings.
This is a huge change for existing companies.
There is no clear indication of the extent to which foreign ownership restrictions will be lifted. It is also unclear how the transition to remove the National Service Agent (NSA) or Local Partner will be undertaken, and what practical benefit there may be outside of the required activities list.
New companies were required to comply with the new laws from January 2021. The deadline for existing companies to amend their structures is this January 2022. For example, if a company has Memorandums of Association with quorum, notice and meeting requirements that are different from the requirements in the Amendment, it should amend its Memorandums of Association to bring them into line with the Amendment by January 2022.
Nexus Partners is on a mission to empower entrepreneurs. With our extensive industry experience and wide network of contacts, we are poised to help take your business to the next level.
Nexus Partners is an expert in transition to 100% foreign ownership. We offer a full range of services, and can help you transition smoothly to 100% foreign ownership.
Nexus Partners can assist with your AGM and increased corporate governance obligations by helping you to manage all of your company’s share transfers, NSA terminations and other processes.
Nexus Partners can also help you to review and update your company’s Memorandum of Association (MOA), to bring it in line with the changes introduced by the Amendment.