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Owner's Profile

Staff Writer, TLR

Published on July 14, 2023, 17:40:59


 Ownership, company law

What if we entice you with a datum that will stimulate the investor in you? The Government of the UAE with a view to create a favourable state of affairs has recently reformed their Companies Law with inclusion of positive list. The strategic plan of Vision 2021 promoted by the government intends to favour FDI which has progressed further with the landmark UAE reform allowing foreign investors of 100 per cent ownership of businesses that will take effect from December 1, 2020.

With a way beholding advanced constructive economy, his Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, said the UAE now enjoys a fertile legislative environment for foreign direct investors in order to enhance the nation’s competitiveness.

The FDI law, which was adopted in September 2018 through Federal Legislative Decree No 19 of 2018 and an ensuing resolution by the UAE Council of Ministers No 16 of 2020 in March 2020, amends Commercial Companies Law (CCL) No 2 of 2015. It is a remarkable step, especially in covid-19 times that will help thriving financiers to expand their business plans with several categories of business licences no longer requiring Emiratis as sponsors and this will invite exceptional foreign investors.  

His Highness Sheikh Khalifa bin Zayed Al Nahyan. Under the existing CCL, foreign shareholders are restricted to own only up to a maximum of 49 per cent in a ‘limited liability company’ (LLC) operating as an onshore UAE business. The law, therefore, requires an Emirati individual or 100 per cent Emirati-owned Company to hold the balance 51 per cent share as a local sponsor.

The new law is a positive turning point in these crucial times in respect of economies. has amended 51 articles of CCL and added new ones, mostly focusing on the regulation of provisions of establishing companies with limited liability shareholding and the UAE Cabinet Resolution in March 2020 determined the ‘Positive List’ of sectors and economic activities in which the FDI law is permissible and the percentage of ownership is 100 per cent in companies outside free zones.

Foreign direct investment is universally made in open economies which will offer a skilled workforce and above-average growth prospects for the investor, as opposed to tightly regulated economies. Consequently, it will attract new reforms and changes in the corporate law structures and proposals of business firms with an introduction to first-hand conventions, convenient client services by law firms in establishing their ventures with comprehensible corporate terms and agreements. Foreign direct investment frequently involves more than just a capital investment. The key feature of such direct investment is that it establishes either effective control of or at least substantial influence over the decision-making of a foreign business which will be at ease for novice investors with due assistance from law personnel.