Under the guidelines published, 100% foreign ownership is available for more than 1,000 commercial and industrial activities, excluding economic activities in strategic sectors which include security, defence and military activities, fisheries and associated services, certain financial institutions, printing banknotes, communications, Hajj and Umrah services, and centres for memorising the Holy Quran. As such, foreign investors can change their shareholding in onshore companies as long as the activities fall under the list of activities permitted to have 100% foreign shareholding.
In addition to the implementation of 100% foreign ownership for certain onshore companies, the following two significant changes under the amended Companies Commercial Law may now be implemented (with the approval of the DED):
- a joint stock company's board of directors does not need to be made up of a majority of UAE nationals or be chaired by an Emirati; and
- foreign companies operating through a branch office will not be required to appoint a UAE national agent (again this is subject to the approval of the DED).
While the Dubai DED has recently provided the list of activities that no longer require minimum Emirati ownership of 51%, AD DED also announced a list of commercial activities that permit the establishment of 100% foreign owned companies incorporated onshore in Abu Dhabi. This announcement was made on 20 May 2021, but came into effect on 1 June 2021.
The AD DED revealed a list of 1,105 commercial and industrial activities that are now open to partial or full foreign ownership in the Emirate for onshore companies. Activities open to foreign ownership range from plastic surgery, and marine leasing to manufacturing, equipment rental, photography and running a zoo. However, we understand that such flexibility is at the discretion of the AD DED.
Foreign investors who have established entities in either of the two Emirates with local partners can now seek to own the entity wholly subject to approval that is to be obtained from the DED / AD DED (as applicable). Additionally, foreign investors can now invest in various sectors in the region without having restrictions on their investments or the requirement of having a local agent. Considering that the announcement has just been made, it is highlighted that it will take some time to see how the regulators are implementing the changes.
For further details, please contact any of our lawyers below.
This Client Alert does not constitute legal advice and should not be used as a substitute for competent legal advice from counsel.