Business Setup in UAE: 100% Foreign Ownership to be effective from 1st June
May 19, 2021
Ministry of Economy has made a very important announcement today stating that the new commercial Company law with regards to the 100% Foreign Ownership will be effective from 1st of June.
The new law will enable company to apply for Business License without the requirement of UAE National as the partner of the company. The new law will enable UAE as an investment destination for majority of International Conglomerates and this will boost the countries competitive edge. The changes are part of a series of measures introduced to make the UAE a more investment-friendly destination, which have also included the offer of 10-year visas for investors and citizenship for Investors and talented professionals.
According to the announcement, all the existing Business in the Mainland can amend their license according to the new commercial Companies law.
On 23 November 2020, the President of the United Arab Emirates, His Highness Sheikh Khalifa bin Zayed Al Nahyan issued a long-anticipated ground breaking decree “Federal Decree Law No. 26 of 2020”, amending the restrictions on foreign ownership within the Companies Law in the United Arab Emirates.
The newly issued decree amended the pertinent provisions of the UAE Federal Law No. 2 of 2015 and supersedes the UAE Federal Law No. 19 of 2018 on Foreign Direct Investment (FDI Law).From that point onwards, Ministry of Economy was working on widening the scope of sectors from 3 and finalizing the sectors to be included in the scope.
Last month, Ministry of Economy made an announcement that they are working on a new legislation to add 10 more business sectors to the commercial Company law. As per the new law, many categories of business license will no longer required UAE National as 51% shareholder of the company. Moreover, the mandatory requirement of having the Local Service Agent will also be no longer applicable as per the new Commercial Company Law.
However, there are exceptions for a few businesses operating in sectors that are strategically important to the UAE. The new decision is not applicable even for wholly owned by Federal or local Government or their subsidiaries.
Please stay tuned with MBG Corporate Services for further update.
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