The UAE announced in November 2020 that foreign nationals would be allowed to own 100 percent of commercial companies within the country. The UAE Cabinet has made some amendments to the Commercial Companies Law (CCL) and approved a “Positive List” of activities under which 100 percent foreign ownership in mainland companies is permitted. This is great news for the business expatriates in UAE to start a company in UAE with 100% foreign ownership.
Previously, 100% foreign ownership was permissible for the free zone companies only, and for the mainland LLC companies, the expatriates could hold only 49% ownership and the balance 51% would belong to the local sponsor/Emirati. This local sponsor would be a silent partner with a yearly fee and would not involve in business or company affairs. However, now with the new law, the ex-pats will be allowed to have 100% ownership in Commercial & Industrial LLC mainland companies without a local sponsor.
The list comprises key sectors such as trading, general trading, travel and tourism, manufacturing, agriculture, transport and storage, hospitality and food services, information and communications, science and technology, health care, education, art and entertainment, and construction and the conditions and the minimum investment required for foreigners. On the other hand, the Law also included a “Negative List”, which is a list of economic activities requiring a certain level of Emirati ownership.
The above changes to the Commercial Companies Law will positively enrich the UAE’s foreign investment and business expansion attractiveness.
Some of the highlighting features for the category lists are:
Commercial and Industrial (Trading & General Trading, Contracting, Manufacturing, etc) sectors are included in the category list.
Under the manufacturing sector, the activities included are manufacturing plastics, pesticides, paints, soaps, detergents, or any products for construction, industrial and commercial purposes. Also manufacturing of metals, electrical equipment, transport, medical equipment, sports products, toys, etc.
Under the agriculture sector, the activities included are cultivation, growing trees, crops, fruits, and forestry activities.
The Positive List includes several eligible activities such as consultancy services, advertising, photographic activities, construction of buildings, translation services, primary, secondary, higher education, hotel and restaurant management, hospitals, and music bands.
The changes will not apply to strategically important sectors, such as oil and gas exploration, utilities, and transport, as well as to state-owned entities.
As per the new changes, the Travel & Tourism license can have 100 percent foreign ownership by a foreign investor with a UAE Local sponsor as a local service agent without any shares and without any administrative & managerial powers. Formerly for this license 100% ownership was not allowed in UAE mainland by any foreign investor but to hold only 49% and the rest 51 % had to be with UAE local sponsor.
Advantages of New Rule:
The new legislation brings a positive economic environment for the UAE Government with a rise in foreign direct investment.
Boosts the interest of the investors or foreign businessmen who look forward to starting a company in the UAE.
Improve the country’s ease of doing business as well as reduce the cost of business setup in the mainland and the time taken to launch a new business.
Renders the country more investor-friendly.
- Provide investors an opportunity to move and expand beyond the UAE-free zones.
And this new rule will come into effect from June 1st, 2021 with the following features:
- No capital or additional fee is required for foreign investors.
- Sole establishment or single-owner LLC is possible.
- For existing Commercial LLC companies, the local sponsor can either be removed or the shareholding percentage of the local agent can be reduced from 51% to a minimum.
- Branches of foreign companies don’t require a local sponsor.
- A general trading company can be completely owned by foreign nationals without an Emirati local agent.
- Applicable to more than 1000 industrial and commercial activities except for activities with a strategic impact, that includes 7 sectors like:
- Security, Defense, and Military activities
- Services related to fisheries field
- Banks, exchange shops, and finance companies
- Print banknotes cash
- Hajj and Umrah services
- Centers for memorizing the Holy Quran
Not applicable to professional activities. The rule for professional activities will remain the same with 100% ownership but requires a local service agent.
The new rule will not bring any change to the current procedures or requirements for business setup or licensing. The only change is that it is not mandatory to have an Emirati local agent or partner for starting a new venture in the UAE mainland. As per the existing rule, the legal form of a company cannot be converted from an LLC to a sole proprietorship under a foreign name, but with the new rule, it can be transferred to a single-person company with limited liability.
At Bytes, we are keen to help foreigners or expatriates for UAE mainland business setup with 100 percent ownership. As we have a team of expert business setup consultants, you will be guided thoroughly in each step for establishing your venture anywhere in UAE. For more details about the 100% ownership in UAE mainland or setting up a company in UAE, contact us at +971522804969 or email us at email@example.com.