UAE to allow investors full ownership of companies from June 1

Dubai - The landmark reform was originally slated to roll out in December last year.

The UAE, a dramatic move, announced on Wednesday that it would allow investors and entrepreneurs full ownership of companies from June 1, 2021.

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Minister of Economy Abdullah bin Touq in a tweet confirmed that the latest decision is a new step that reflects the UAE government’s commitment to supporting the economy and enhancing its readiness for the future.

In November 2020, the UAE announced that the landmark reform allowing foreign investors 100 per cent ownership of businesses would take effect from December 1, 2020. However, after widening the scope of sectors eligible for full ownership by foreign investors, the law is now ready for roll out from June 1, 2021.

The long-anticipated and widely discussed reform, which will have game-changing implications on the investment landscape of the nation, was approved by President His Highness Sheikh Khalifa bin Zayed Al Nahyan last year.

His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, has said the UAE now enjoys a fertile legislative environment for foreign direct investors in order to enhance the nation’s competitiveness.

10 new sectors

Last month, the UAE’s Ministry of Economy said it is working on a new legislation to include 10 new sectors to the Commercial Companies Law, which allows 100 per cent foreign ownership of onshore companies in the country.

While speaking at the Seventh edition of Sharjah Economic Ramadan Majlis, Abdulla Al Saleh, Undersecretary of the UAE’s Ministry of Economy for Foreign Trade and Industry, said this landmark legislation in the Commercial Companies Law is in its final stages of formation which will enable investors and business in 10 new sectors of strategic importance to come under the purview of the law.

As per the new foreign direct investment regime, several categories of business licences will no longer require Emiratis as sponsors with 51 per cent shareholding rights from December 1.

Go for new status

Al Saleh said the cancellation of the national service agent requirement came into force on April 1, and also affirmed that all current and previously licensed businesses in the UAE can amend their statuses according to the new amendments to the commercial companies’ law.

“Legislations that have been issued or those that will be enacted soon seek to increase the country’s competitiveness for both local and international investors, and advance business performance. These legislations are not the outcome of a crisis, but follow a clear vision of the country’s economic future envisioned collaboratively by federal, local, and private sector stakeholders,” Al Saleh said.

In 2020, recorded a 44.2 per cent surge in foreign direct investment (FDI) flow to Dh73 billion year-on-year on the back of a series of region-first reforms, including the 100 per cent business ownership law.

FDI flows during 2020 were mostly into digital economy, including Artificial Intelligence, Internet of Things, blockchain, medical knowhow, augmented and virtual reality (AR and VR), robotics, self-drive automobiles, renewable energy, innovation, and agritech, among others. The oil and gas sector was the busiest in attracting FDIs with Adnoc spearheading a number of big investment deals and partnerships.

Industry executive upbeat

Paras Shahdadpuri, chairman, Nikai Group of Companies, appreciated the latest initiative to grant 100 per cent ownership of companies from next month.