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UAE Allows 100% Foreign Ownership of Companies

November 25, 2020

In a landmark decision, which will have a far-reaching positive impact UAE has allowed foreign nationals to hold full ownership of businesses without the need for a UAE national's sponsorship. This move will enable foreign investors to hold 100% ownership of their company formation in UAE from December 1, 2020.

According to leading experts & top businessmen in the GCC this move will be a game-changer leading to a massive influx of Foreign Direct Investment, New Partnerships which will further strengthen UAE's relations with investors around the globe.

UAE seals its position in the region and worldwide as the ideal destination for any business to grow.

His Highness Sheikh Mohammed Bin Rashid Al Maktoum had once quoted that “The race for excellence has no finish line” which goes on to prove that the country has always been in the front-foot for sustainable economic development.

Business Setup in Dubai

As per Cabinet Resolution No. 16 of 2020 the decree will provide for the establishment of a committee undertaking responsibilities of identifying: -

  • Activities of Strategic Importance
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  • Setting up specified levels of the minimum share capital of UAE national and other relevant measures.

It remains to be seen what approach will be taken by the committee and that will have a direct bearing.

Business Setup in UAE

What does this Revamp mean for Investors?

Significant Changes: -

  • The changes will authorize the UAE Cabinet to set up a committee that includes representatives of the relevant authorities with a view to proposing activities of "strategic impact" and the measures required to license companies operating in such areas.
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  • The changes will increase the percentage shareholding that companies wishing to become joint-stock companies through an IPO can sell - 70 percent of the company from the current 30 percent.
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  • The changes will enable companies to approve a capital increase through issuing bonds and converting them into shares.
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  • The changes will include provisions relating to full foreign ownership of companies in the UAE.
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  • The changes will remove the requirement to have a UAE national agent.
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  • The changes will supersede the UAE Federal Law No. 19 of 2018 on Foreign Direct Investment.
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  • The impact will include certain provisions and regulations related to limited liability and joint-stock companies.
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  • The impact will grant relevant local authorities powers, including setting a specific percentage of UAE nationals in the capital allocation and boards of directors of companies, approving requests to establish companies and identifying the fees and charges according to the policies adopted by the UAE Cabinet.
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  • Electronic voting at general assembly meetings will be permitted.
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  • The impact will empower the Securities and Commodities Authority to establish the controls and procedures required for evaluating in-kind shares and the names of stakeholders attending the general assembly meetings of companies.
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  • The impact will allow for the appointment of board members who have the expertise and are not stakeholders, without stipulating a specific percentage, as well as the dismissal of a chairman or any other board members in cases of fraud or misuse of power.
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  • The impact will enable stakeholders to sue a company in the civil courts over any failure of duty that results in damages.
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  • Companies will have a maximum of one year to comply with the amended law from the time the changes become effective. This period may be extended under a decision by the cabinet as proposed by the Minister of Economy.
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Why Avyanco?

Avyanco is one of the leading business setup consultancy firms in the UAE. We offer end-to-end tailor-made solutions for Business Set-Up in UAE, Corporate PRO Services, Bookkeeping - Accountancy, Tax Compliance & Advisory, Audit - Assurance & Corporate Office Space.

What separates us from other Business Service Providers is that we execute our services in consonance with Internationally adopted practices as it provides handholding in a complex jurisdiction

Contact Avyanco & allow our experts to help you understand how this significant change impacts your business. Call/WhatsApp: +971 50 3989000, (T): +971 4 240 5000, Email: info@avyanco.com.

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