As per the Law of 2015, the maximum allowed number of shares for the foreign investor was 49%, while the remaining 51% was owned by the UAE national. Now, with the adopted amendment, the foreign investor can hold 100% of shares.  

Earlier, Article 10 of the Law of 2015 stated the requirement for 51% of the company shares to be held by the Mainland company, owned by the UAE national, or individual UAE national(s). Currently, this requirement is removed. DED has defined the list of business activities with full ownership of Mainland Companies for emirates of Dubai and Abu Dhabi. Thus, for Abu Dhabi, there are 1,105 business activities listed for a number of sectors. Meanwhile, for Dubai, there are 1,059 activities available for industrial and commercial sectors. 

Several examples of the activities, eligible for 100% foreign ownership in Dubai:

• Jewellery trading
• Hotel
• Used and New Auto Spare Parts & Requisites Trading
• Used and New Automobiles Trading
• General Trading
• Mobile Phones & Accessories Trading
• Ready Made Garments Trading
• Tobacco & Cigarettes Trading
• Freight broker
• Investment in Retail Trade Enterprises and management

Several examples of the activities, eligible for 100% foreign ownership from DED Abu Dhabi:

• Wholesale of Jewelry, Diamond, and Precious Stones 
• Tea Cultivation
• Clothing Accessories Manufacturing
• Leather Wearing Apparel and Its Accessories Manufacturing 
• Oil and Gas Production Facilities Operation and Maintenance Services
• Poultry Products Production
• Wholesale of Fresh Meat Trading
• Cars Additional Parts Trading 
• Building Sites Cleaning 

As for the previous companies, apart from the removal of the UAE-national partner, there is no change for the current licensing requirements. Moreover, there are no new requirements towards additional fees required for the 100% ownership. As for the existing business licenses, their status remains the same, according to the Memorandum of Association (MOA). If an owner wishes to reduce or withdraw the share of a local partner, it is possible to amend the license as per the legal procedures with the consent of both parties.

Previously, LLC’s were required to have a share capital of at least AED 150,000, although in practice the minimum capital accepted by Dubai DED was from AED 200,000 to AED 300,000. New requirements for minimum share capital of the company have been reduced to AED 100,000. Despite these requirements, there is no actual proof of payment needed.

Meanwhile, no UAE national is required for branches of foreign companies. Meanwhile, commercial agencies do not fall under the 100%-ownership, being regulated by the Commercial Agencies Law.

The amendments are aimed to assist in reshaping the economic ground of the country, and mark the new stage for the previous interim step, taken by the Government concerning the Federal Law 19 of 2018 Regarding Foreign Direct Investment (FDI Law) previously, and which has been repealed.

Moreover, there is room for observation on the influx of the inbound investments in a number of sectors, and how it would modify the economic situation for Free Zones. The situation on the legal landscape will most likely experience reconsideration from a number of Free Zones, which currently comprise more than 45 in the UAE (for the moment of this article publication). Policies and legal requirements from Free Zones will possibly result in providing certain incentives or alleviations of their restrictions, not available from Mainland Companies. For the moment, it is challenging to predict the exact image of reshaping the limitations or possible exemptions from the limited grounds from Free Zones authorities.

Thus, regardless of the perspective of analysis (whether legal or economic), the decision on full ownership is one of the key strategies to stimulate and enhance the direct foreign investments to the country, contributing to reaching the UAE’s ambitious goal to become an international financial hub, which will be competing with other giants of the global market.

If you would like advice or assistance concerning the amendment of the license or registering a 100%-ownership company, kindly contact us. 

Marsel Shadmanov

Head of Corporate Services at Garant Business Consultancy DMCC

Phone +971 4 421 4335

Email info@garant.ae