Complex Made Simple

For real? Is UAE 100% foreign business ownership moving out of free zones?

If you’re an investor, you’ll search for what is best for you, and 100% business ownership is definitely what you are looking for.

For many years, a restriction precluded foreign investors from owning more than 49% shareholdings in UAE companies, with 51% ownership given to nationals.

Is the new law going to pass?

No more restrictions

A final draft of the new investment law allowing 100% foreign ownership has been sent to the UAE Cabinet for approval, UAE Economy Minister Sultan Al Mansouri confirmed.

“It will be this year, I can assure you, the latest will be Q4,” Al Mansouri told media, “I am optimistic; it is critical that we finish the investment law this year.”

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But it might not happen

According to Hadef & Partners LLC, a leading independent UAE law firm, “It is already permissible for foreign (i.e. non-UAE) shareholders to own up to 100% of companies which are established in the various ‘free zones’ of the UAE.”

“But this has always been subject to certain trading restrictions which limit access to the non-free zone areas of the UAE (often referred to as ‘onshore’ UAE),” they added.

This possibility was previously raised in February 2015, according to Hadef & Partners.

At the time, the proposal was pushed back by the consultative Federal National Council (FNC) and other bodies because they feared it will negatively impact Emirati businesses.

“This situation is very bad. These clauses are completely contradictory and could lead to foreign investments being outside the control of the state and its supervision, and this, in turn, could lead to destabilization of security,” FNC deputy Ahmed al-Zaabi said in 2015.

Why does the UAE want to give foreign investors 100% ownership?

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More investors means more money.

implementing a 100% expat business ownership scheme will lure foreign investors, according to Al Mansouri.

He added that the UAE is expected to attract $10.6bn to $10.8bn in foreign investments this year from $10.3bn last year.

Saudi has already passed a 100% ownership, albeit targeting investments, assets, and capital at high thresholds.

The UAE can leverage its reputation as an international hub for business by allowing such law to pass, and increase liquidity into the financial sector.