Foreign nationals permitted 100% business ownership in the UAE
UAE President, Sheikh Khalifa bin Zayed Al Nahyan, issued a decree on Monday, November 23, allowing foreign nationals 100 per cent ownership of commercial companies within the country.
The decree, which introduces significant amendments to the UAE Federal Law No. 2 of 2015 on Commercial Companies, annuls the requirement for commercial companies to have a major Emirati shareholder or agent, providing full foreign ownership to expats of onshore companies, reported state news agency WAM.
Under the new amendments, businesses can now be fully established by non-Emiratis of all nationalities, with companies being given a maximum of one year to comply with the amended law from the time its articles become effective. This can be extended under a decision by the cabinet as proposed by the Minister of Economy.
The decree supersedes the UAE Federal Law No. 19 of 2018 on Foreign Direct Investment (FDI Law). It also includes certain provisions and regulations related to limited liability and joint stock companies aimed at attracting foreign capital.
The decree grants relevant local authorities a set of powers, including that of setting a specific percentage of Emiratis in the capital allocation and boards of directors of companies, approving requests to establish companies – except for joint stock companies – and identifying fees and charges according to the policies adopted by the UAE Cabinet.
In a major decision, firms wishing to become joint stock companies can, after the approval of relevant authorities, sell no more than 70 per cent of the company, instead of the current 30 per cent cap, through IPOs.
Furthermore, the decree authorises the 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 licence companies that operate in such areas.
Upon the recommendation of the committee, the cabinet will stipulate which activities shall be considered of strategic impact and the required measures for licensing those companies.
Electronic voting at general assembly meetings will now be permitted under the new amendment.
The decree empowers 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.
It also allows 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 if a judicial judgement is issued against them for committing fraud or misusing their power.
The decree enables stakeholders to sue a company in civil court over any failure of duty that results in damages.
With regards to capital increases or decreases in public companies, the decree enables a company to approve its capital increase through issuing bonds and converting them into shares.
The rule will be applicable from December 1, 2020, with businesses no longer requiring an Emirati sponsor