Encouraging news for Foreign Investors with ‘Positive List of Foreign Direct Investment Law’
March 16, 2020
Latest Developments:The UAE has opened its doors to allow Foreign Direct Investments in many sectors as mentioned in UAE Federal Law No.19 of 2018 of Foreign Direct Investment (“FDI Law”) which shall allow foreign investors to have 100% ownership in Companies established in the UAE mainland.Previously, investors that wanted to retain 100% ownership and control over their business operations (with the exception of some professional services) were limited to incorporating their businesses only in Free Zones which restricted them from freely providing goods and services to entities registered in the UAE Mainland. Previously investors that registered entities in the mainland in UAE in order to freely engage with large UAE mainland registered companies were only able to own 49% shareholding rights in the company with 51% owned by a UAE National shareholder. This made investors uncertain of their powers and rights of being a minority shareholder in their own business.
Benefits to Investors:The new FDI Law is a significant change- in the benefits of investors, allowing foreign investors to both hold up to 100% ownership for the company as well as register it in the UAE mainland which allows them to freely trade with all UAE mainland entities. Additionally, 100% ownership allows 100% capital repatriation and 100% company management for all sectors which are mentioned in the Positive List of the new FDI Law.
The Positive List includes Hospitality & Service Sector, Agricultural Sector, Art and Entertainment;Construction; Aircrafts & Motor Vehicles industry, Food Sector, Information and Communication, Manufacturing Industry and Education amongst others.Overall the Positive List includes 122 activities across three sectors (i) Agriculture (19 activities); (ii) Industry (51 activities) and (iii) Service (52 activities).There are certain qualification requirements as per the FDI Laws such as minimum capital requirements, Emiratization threshold and restrictions on the type of legal entity that may conduct business in a specific sector, . for example the relevant Authorities may control investments depending on the business activities. There is also a Negative list issued in the FDI Law which sets out certain sectors where 100% ownership is not granted this includes, Banking & Financing Activities; Industries in the Oil & Gas Sector, Medical retail private pharmacies, Electricity Service Insurance Services, Land and Air Transport services amongst others. These sectors require local sponsors holding at least 51% ownership.Request a call back and one of our team members will assist you and answer your queries