UAE’s new Commercial Companies Law entered into force on June 1st. The Companies Law lifts many of the ownership restrictions that previously applied to foreign investors in onshore companies. Before the issuance of the new Companies Law provisions, foreigners were completely prohibited from investing in certain critical sectors. The new law is an amended version of the Commercial Companies Law originally issued in 2015.
Furthermore, foreign investors were subject to a 49% shareholding limit in UAE companies within the permitted sectors. The only areas in which foreigners could enjoy 100% ownership of commercial entities were free zones. Such companies were denominated as FZEs, or “Free Zone Entities”.
The new Investment Law offers many advantages that help to invest in Dubai by providing all incentives to attract international, regional, and local investors which are:
- Allowing a company’s founder to own 100% of the shares,
- The number of commercial categories in which 100% foreign ownership is permitted has been expanded from 122 to more than 1000.
- Shareholder limits for private joint stock companies have been completely lifted.
- Liberalizing the investment regime contained in the 2018 Foreign Direct Investment Law
The law still excludes specific strategic sectors from foreign ownership. Consequently, free zones are still relevant, even subsequent to the law’s entry into force. Foreigners’ ownership of companies will continue to be subject to the individual regulations of each Emirate, which has the authority to add or remove categories from the list of those open to 100% foreign ownership. Overall, the new law will attract global companies to invest in the Emirates.