The United Arab Emirates has made significant changes to its commercial law.
The United Arab Emirates has long been an attractive destination for both the tourism sector and business in general, and the international business community recognizes that the commercial context is very favorable and becomes more and more interesting year by year. The country has continued to initiate progressive legislation to facilitate the establishment of foreign companies and increase the level of foreign investment, which has resulted in a thriving economy with a constantly upward trajectory. Taking all this into account, the local authorities have decided that, as of June 1, 2021, the changes made to the UAE Commercial Companies Act by Decree-Law No. 26 of 2020 (the "Decree-Law") paved the way for total foreign ownership" onshore” LLC and commercial companies.
Until the point in time indicated above, Article 10 of the Companies Act was in force, according to which a UAE national had to hold a majority stake of 51% in a commercial entity. The latest changes allow majority and total foreign ownership by foreign investors, whose activities have since been unrestricted. In addition, the potential imposition of any restrictions will be through a resolution of the Council of Ministers limiting foreign ownership of companies engaging in projects considered to have "strategic impact for the United Arab Emirates" so as to regulate the activity of a given business sector through the relevant Departments of Economic Development (DED).
The Abu Dhabi DED has revealed a full list of more than 1,100 sectors of the economy that may be wholly owned by foreign individuals and companies. At the same time, DED in Dubai announced that over 1,000 licensed commercial activities will be allowed to run in the Emirate, which will be 100% foreign-owned and without any specific capital thresholds.
The country's federal authorities have also made it clear that they will consider companies and activities on a case-by-case basis, and the current list of liberalized economic sectors should be regarded as an open canon in the long term. To enable this, the amendments also remove the requirement for foreign land companies to do business with the need to appoint a UAE national as a service agent. In comparison, Cabinet Decision No. 58/2020 ("UBO Decision") will require that all foreign companies in the UAE, with the exception of those licensed in Free Zones and entities nationalized by the UAE authorities, are simply required to developing and publishing lists of all registered partners and beneficial owners.
These changes are sure to accelerate the influx of applicants lured by the opportunities afforded by the opportunity to flourish their ventures in the UAE. Eberhard Advisory lawyers have significant experience in the context of the UAE, as well as knowledge and long-term relationships with national authorities to formalize the legal status of your company in this business-friendly country.
