The UAE’s Ministry of Economy has announced the amendment of its Commercial Companies Law (the “CCL”), which previously contained provisions that made it impossible for foreigners to own and fully-control businesses within the kingdom.
This new amendment reverses many of those provisions and as such makes it possible for foreigners to own and control 100% of firms registered under the CCL as “onshore companies”. The said amendment went into effect from 1st of June 2021.
Before the amendment, it was mandatory for a minimum of 51% equity in any onshore firm be held by one or more persons with UAE citizenship. This law, and many others like it, has posed a challenge to foreign investors, making private equity and venture capital investment decisions a lot harder and more complex for firms under that classification.
The amendment is a delight to many investors as it alleviates the employment of nominees and other coping measures while also eliminating the extra cost and legal uncertainty that the previous restrictions imposed on them.
In addition, single-shareholder entities, which, before now, had to be fully-owned by UAE national(s), can now be fully-owned by foreign investors.
The Department of Economic Development (“DED”) of each Emirate has been charged with defining the specific business activities within which 100% foreign ownership will be permitted. The Abu Dhabi DED, for example, has issued a list of 1,100 activities, covering a number of sectors.
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