The UAE is set to perform a major revamp of its companies’ and foreign ownership laws. Emirates News Agency (WAM) reported late afternoon on Monday, 23 November, 2020 that the UAE President, His Highness Sheikh Khalifa bin Zayed Al Nahyan, issued a decree to abolish the requirement for companies to be majority-owned by UAE national shareholders (which we understand to also include the removal of the requirement to appoint a UAE national agent to branch offices).
It is understood that these seismic changes are to be swiftly introduced. The objective of the reforms is to attract foreign investment and further liberalize and modernize the UAE’s legal and business landscape.
Whilst the proposed changes suggest the outright abolition of any requirement for Emirati nationals to hold a majority interest in onshore companies, it remains to be seen exactly how these changes will be applied in practice (e.g. sector reach, interaction with other regulatory requirements and so forth). Certain key business activities such as manpower supply and oil and gas activities are currently reserved for companies that are 100% Emirati-owned, for example. The UAE’s free zones already allow 100% foreign ownership. However, companies incorporated in these free zones are subject to restrictions, including their ability to engage in onshore ‘mainland’ UAE activities.
The UAE authorities are expected to release further guidelines in the coming days, which we anticipate will set out how the proposed changes are to be applied in practice. Watch this space.
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