The UAE Issues Rules for Full Foreign Ownership of Companies

Dubai Department of Economic Development (DED) issued detailed guidelines clarifying the procedures for 100% ownership of commercial entities in the emirate for foreign investors. 100% foreign ownership is available for more than 1000 commercial and industrial activities excluding economic activities in seven strategic sectors the Dubai Economy said.

The revisions are in accordance with the Federal Decree-law No. (26) of 2020 that amended some provisions of Federal Decree-Law No. (2) of 2015 Regarding Commercial Companies (CCL). A wide variety of areas, a total of 59 investors in Dubai, have already taken advantage of the new law that came into effect on the 1st of June.

Dubai Economy said the commercial activities in which full ownership was sought include general trade, contracting, jewelry, gold, pearls, luxury watches, food, as well as cars and trucks trading. the status of existing business licenses - in which full ownership of the activities is available and includes an Emirati partner - remains unchanged as per the Memorandum of Association (MOA) of the company and the partners' resolution.

Investors seeking full ownership can complete the procedures as required through the service channels of the DED or invest in a digital platform. The strategic decision enhances the UAE's investment attractiveness while reinforcing the competitive advantages that Dubai enjoys as an investment destination, DED said. The decision will accelerate the UAE's economic recovery and add to the gains the country has made so far.

Conclusion building on the amendments that have started with the FDI Law of 2018 and its Negative/Positive Lists to the Decree-Law No. 26 of 2020 and what has changed, it is worth noting that the FDI Law didn’t actually change and amend the CCL where the latter remained the default law and the FDI Law acted as the exception where activities mentioned in the Positive List do not require local share contribution.

On the other hand, the Decree-Law No. 26 of 2020 is now the rule with all the amendments it brought to the CCL, and the exceptions are restricted to the activities of strategic importance. Furthermore, some activities that have been outlined in the FDI Law as the Negative List will still fall under the restriction of the 51% local contribution rule.

These legislative changes for mainland companies are expected to impact the role of UAE’s free zone jurisdictions in a way which, prior to this change, provided a competitive environment to foreigners who were reluctant to make certain investments in mainland UAE at a time when they could not hold the controlling stake in these mainland investments.

Written by:

Bashar Abdalla Al Masayba | Bashar Al Masayba Advocates & Legal Consultants