100% Foreign Ownership for onshore Mainland Companies in ten sectors

Another Leap Forward For the UAE: 100% Foreign Ownership for Mainland Companies

The UAE continues to be the trailblazer in the region as it gallops to global economic super-hub status. The latest milestone on that journey is the move to allow 100% foreign ownership in onshore Mainland companies in ten sectors.

This follows the UAE government passing Federal Decree Law No. 26 of 2020. This new amendment to the Commercial Companies Law (Law No. 2 of 2015) allows full 100% foreign ownership with effect from 1 December 2020 and eliminates the need for a UAE National to hold majority (51% +) stake in Mainland companies, or to be a Registered Agent. It is to be applicable for 10 sectors. The sectors will be announced soon by the UAE Cabinet. Existing companies can change their ownership structure and status in line with this move.

Each emirate is to shape the specifics of the amendment at its own discretion. Individual emirates retain the power to determine the level of foreign ownership.

Prior to this, 100% foreign ownership was allowed only in Free Zone companies. In recent years, individual emirates had allowed foreign stakeholders to acquire the balance stake in a company on a case-to-case basis; but this was always the exception that proved the rule.

This is a landmark step and a major leap forward for an economy that is not only the second largest in the region but also is ranked 1st in Ease of Doing Business regionally and 16th globally. It is expected to impact the investment landscape in the region. The timing of the move during the Covid pandemic adds further strategic depth to the decision.

If your company is considering structural change following the amendment, it could involve navigating through complexities such as revaluating your existing contracts with Local partners or agents and making the appropriate changes to your documents. We at MBG are here to help with:

- Assessment of the company’s Memorandum of Association (MOA) and the rights of its parties - Advice on whether the company falls within the 10 sectors and if so, on the applicable process once that is announced - Assistance with settlements and revision of the MOA in compliance with the new FDI Law

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