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Companies in the UAE Can Now Have Full Foreign Ownership
This year, the UAE has announced several major changes to its judicial system that are aimed at increasing foreign investment and attracting new residents. Yesterday, the country’s commercial laws were amended to allow companies to have full foreign ownership, a move that is expected to create a fresh wave of inward investment. The change is also expected to have a positive impact on the stock market, as companies that plan to go public will be able to sell 70 percent of their shares, more than double the previous limit of 30 percent. At a time when the pandemic and other geopolitical storms loom large in the news, announcements like these come as a welcome relief and only help to cement the UAE’s position as one of the best countries in the world for visitors, residents and investors. The new ruling will go into effect from December 1st, 2020, though it will not be applicable to certain sectors such as oil & gas and transport.
Under the previous laws, companies that operated on the UAE mainland were required to have a majority Emirati partner. Only companies operating in free zones were exempt. For a country with a considerable expat population, this made sense as a way to protect its own interests. However, the UAE has become an increasingly important player on the global stage. It is the home away from home for many around the world and as an investment destination, offers far greater dividends than most major cities such as London, New York and Hong Kong. Initiatives such as the amendment to company ownership help to make the UAE an even more attractive prospect for foreign investors, which has the potential to significantly uplift the country’s economy.
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It has been a year of game-changing announcements and incredible achievements for the UAE so far, in spite of the havoc that the pandemic continues to wreak worldwide. The Abraham Accord, a formal agreement between the UAE and Israel, will over time alter the face of Middle Eastern politics. Barely a month ago, the country announced changes to its judicial system that include decriminalising the sale of alcohol, legalising cohabitation amongst unmarried couples and adjusting inheritance laws so that a will would be executed under the jurisdiction of a resident’s home country. While several countries have gone back into lockdown to combat second and, in some cases, third waves of the pandemic, the UAE has managed to weather the storm quite capably, striking a balance between caution and continued operations under a new normal. The idea of 100% foreign ownership for companies was floated roughly two years ago, when it was announced that investors in the UAE and certain categories of residents would be able to obtain five and ten-year visas. However, as the visa processes began to be rolled out, there were still no details on how company ownership would be affected until now.
With a little over a month left in 2020 and UAE National Day just around the corner, there is plenty of time for the country to put out at least one more announcement aimed at reshaping its future. But even if this is the last new announcement for the year, we can say with confidence that 2021 should prove to be a very exciting year.
