UAE’S New Commercial Companies Law: Which Businesses Can Aim For 100% Foreign Ownership?
Gulf News Feature, May 20th, 2021:
Shareholding changes at existing businesses will still be on case-to-case basis
In terms of strategic importance, the revisions to the UAE Commercial Companies Law go further and deeper than any made in the recent past.Image Credit: Shuttertstock
Dubai: The immediate focus of the revised UAE’s Commercial Companies Law will be on new businesses being launched in the country through 100 per cent ownership of local operations. The immediate - and biggest – gains should be for tech and digital-focussed businesses that want to set up in the mainland and not have to go through free zones for full ownership.
While June 1 has been set as the date for the revised Law to be fully effective, investors and business owners will need to closely watch for add-on developments. The UAE Cabinet will establish a committee, comprising representatives from each of the Department of Economic Development entities, which will be responsible for determining:
* A list of commercial activities considered to have a strategic impact on the UAE’s economy (Strategic Impact List); and
* Additional licensing controls to impose on companies undertaking commercial activities in sectors listed in the Strategic Impact List.
“The negative list – which will not be abolished even with recent amendments - contain important sectors such oil and gas, telecom and utilities,” said Bahjat Abou Zeyd, Senior Associate – Corporate at the law firm of Abdulla Alawadi & Associates. “[These sectors] will remain subject to the foreign ownership restrictions.”
To qualify for foreign ownership exemption, the applicant needs to meet various requirements such as share capital contribution, use of technology and employment of UAE nationals
- Bahjat Abou Zeyd, Senior Associate, Corporate, Abdulla Alawadi & Associates
Landmark upgrade
Even then, the changes to the UAE Commercial Companies Law is comprehensive enough, and addresses the need to get foreign investments and new business activity kick up a gear or two. Most important, it gives clarity to what prospective business owners can expect to do.