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Full Foreign Ownership Law Seen by Year end

The final draft of the long awaited law allowing 100 per cent foreign ownership of companies will be ready within a month and will be sent for the Cabinet approval, UAE Minister of Economy Sultan bin Saeed Al Mansouri said on Tuesday.

The draft law will be submitted to the cabinet within a month. Our expectation is that it would have to come out during 2010,” Mansouri said on the sidelines of the Global Dubai Tea Forum in Dubai.

The proposed new rules, aimed at allowing foreigners or foreign companies to own 100 per cent of their businesses in the UAE, have been under consideration for several years now and are expected to have a far-reaching positive impact on the way businesses are run in the country.

Under the existing companies law, foreign ownership of businesses in the UAE is limited to a maximum 49 per cent and 51 per cent is owned by nationals.

The current 49-51-equity law is applicable to all nationalities except those from within the Gulf Cooperation Council countries.

GCC nationals are allowed full ownership rights like Emiratis.

At present, foreigners are given full business ownership rights in free zones across the UAE.

Although the proposed new law has been in discussion for long, most analysts and legal experts remain clueless about its finer details.

Also in the pipeline is legislation aimed at protecting foreign investments in the UAE.

In September 2009, Mansouri hinted at new draft laws designed to give foreign investment protection and full ownership rights to foreign high-tech industries as part of a number of significant reforms that aim to strengthen the country’s legislative framework.

Legal experts and business analysts believe that such bold reforms will help attract foreign direct investments and big multinationals to the UAE mainland instead of to certain free zones where they are currently confined.

The proposed law on foreign investment will address a key investor concern about protection against contract disputes and other legal issues.

It will further enhance the UAE’s position in the global competitiveness ranking by the World Economic Forum, analysts said.

Mansouri said in September all these new measures, in line with recommendations made by the World Trade Organisation, were in final stages.

Al Mansouri said that growth in the UAE economy would rebound in 2010 to 3.2 per cent from 1.3 per cent in 2009.

The growth forecast is in sharp contrast to an International Monetary Fund forecast of 0.6-per cent growth.

“The coming period will witness gradual growth, initially, picking up momentum,” Mansouri said.

“Our GDP (gross domestic product) grew 6.2 per cent in 2007 and 7.4 per cent in 2008 and (had) an estimated growth of 1.3 per cent in 2009 and (is expected to grow) 3.2 per cent in 2010,” he said.

The IMF said last month that the UAE’s economy was “adversely affected by a series of external and domestic shocks in 2009.”

“The difficult side of it is behind us,” the minister said. “Now we are moving on. If you look at the price of oil, it’s going up. That’s a positive sign that GDP should grow.”

issacjohn@khaleejtimes.com