On 1 June 2021 changes to the UAE Companies Law removing key restrictions on foreign ownership of onshore companies in the UAE came into effect. The implementation represents a defining change to the regulation of foreign investment within the UAE and will have significant impact on existing companies and prospective investors.
Prior to the amendment, Article 10 of the Commercial Companies Law (the CCL) required 51% of the share capital of all UAE onshore companies to be owned by UAE Nationals. Article 10 has been amended to remove this blanket requirement, paving the way for the possibility of 100% foreign ownership across the UAE. However, the amendments do not represent a wholesale removal of restrictions and Article 10 now refers to ownership restrictions being continued in respect of companies undertaking activities that have a been determined, by way of Cabinet Resolution, as having "strategic impact" and, significantly, grants each Emirate's Department of Economic Development (DED) the power to impose minimum UAE National shareholding levels and board participation for companies incorporated within their jurisdiction.
Since the announcement by the UAE Minister of Economy, His Excellency Abdulla Al Marri, that the amendments to the Companies Law would come into effect from 1 June, both the Abu Dhabi DED and Dubai DED have released lists of more than 1,000 commercial activities covering a broad range of sectors in which 100% foreign ownership is now permitted. Significantly the lists of activities are broader list than the 'positive list' that applied under the (now repealed) Foreign Direct Investment Law (Federal Law by Decree No. 19 of 2018). The Dubai DED has also confirmed that minimum share capital requirements will not be imposed on wholly foreign owned companies (other than the usual requirements).
Whilst the publication of the DEDs' lists provides welcome clarity and the list of activities is extensive, it does appear to indicate that the approach of both the Dubai and Abu Dhabi DED (at least at the outset) is for 100% foreign ownership to be permitted only if a company's licenced activities appear on their list, as opposed to the approach of all activities being open to 100% ownership unless otherwise stated. There does appear to be a broad alignment between the two lists alleviating concerns that there may have been inconsistent approaches between the authorities across the UAE.
We look forward to seeing how these changes are implemented and develop over the next few weeks.
If you would like further information or to discuss whether your company undertakes activities that are now included on the lists released by the Abu Dhabi DED or Dubai DED, please contact your AG contact or any contact listed below.