The implementation of amendments to the Commercial Companies Law (CCL) from 1 June 2021 marks a new dawn for the country’s business community; this will allow ex-pats to have 100 ownership in Dubai.
In this article, you will learn about 100% ownership in Dubai. We are going to discuss DED foreign ownership and other matters related. Let us observe:
- What has changed so far regarding foreign ownership?
- Who is eligible for full ownership of a business in the UAE?
- Why were laws changed to allow for full ownership of a company?
- Mainland versus Free Zone company
- Benefits of forming a company on the Mainland
- Significance of full foreign ownership in the UAE
- Updates on the UAE Mainland establishment’s 100% foreign ownership
- The UAE allows for full foreign ownership in thirteen industries
- How can Connect FZ help you get 100 ownership in Dubai?
1. What has changed so far regarding foreign ownership?
The new laws emphasize the regulation of provisions for the formation of commercial companies with limited liability structures. A single person or a group can own a Limited Liability Company (LLC).
Previously, ex-pat business owners could only own 49% of their companies. The remaining 51% must be held by a UAE national, also known as an Emirati sponsor or partner. Only a few activities in the professional services sector and certain free zones permitted foreigners to own 100% of a company.
However, the amendments now exempt foreign investors from the UAE nationals’ minimum percentage ownership requirement. As a result, natural and legal persons can now establish businesses on the UAE Mainland without the need for a local partner.
This means that expatriates can now benefit from 100 ownership in Dubai by partnering with a local service agent (LSA). An LSA assists you with all of the paperwork and licensing procedures while holding no equity in your company. As a result, you have the authority to make decisions.
2. Who is eligible for full ownership of a business in the UAE?
2.1. Dubai
The revised laws in Dubai will apply to 1,061 of the 2,300 total economic activities listed by the Department of Economic Development (DED). As a result, roughly half of all business activities, including trading and manufacturing, qualify for 100 ownership in Dubai.
However, for professional services activities, foreign investors with 100% ownership in the UAE continue to benefit entrepreneurs. However, they require a local service agent and strictly adhere to the sole establishment legal structure rather than an LLC.
2.2. Abu Dhabi
Meanwhile, the majority of trading activities in Abu Dhabi still require investors to partner with an Emirati sponsor. As a result, they must adhere to the 51-49 shareholding provision. This means that 100% foreign ownership in Abu Dhabi is not possible yet.
2.3. Other emirates
The implementation of the 100% ownership of business varies by Emirate. While Dubai and Abu Dhabi have already implemented the new regulations, other states are expected to follow suit. Foreign investors will be able to enjoy complete ownership of their businesses once the relevant jurisdictions implement the regulations.
Connect FZ becomes your business partner at an affordable cost, assisting you with all of the procedures involved in establishing a company with 100 ownership in Dubai.
3. Why were laws changed to allow for full ownership of a company?
- Creating a favorable legal environment for the establishment of businesses.
- Facilitating 100% ownership of businesses in the UAE will improve the country’s economic readiness.
- Making it easier to do business.
- Increasing investment and commercial opportunities to help prepare for the future.
- Increasing the competitiveness of the business environment in response to rapid economic changes and global economic developments.
- Responding to the UAE business community’s changing needs.
- Increasing the country’s appeal to ex-pat investors, businesses, and even startups.
- Allowing foreign investors to exercise complete operational and legal control over their businesses without interference.
- Attracting business aspirants from around the world looking for a home for their company and enjoying UAE 100% foreign ownership.
4. Mainland versus Free Zone company
The UAE has approximately 45 economic zones where you can trade goods and services at preferential tax and customs rates. The rest of the area in the UAE, excluding free zones, is the Mainland. From a business standpoint, the UAE is divided into three regions – Mainland Area (onshore), Free Zone, and Offshore – where you can establish a company.
Each jurisdiction has its own set of advantages and disadvantages when it comes to business setup. While the free zone area only allows companies to trade within the free zones, the Mainland area allows companies to conduct business not only within the UAE (including free zones); but also anywhere in the world.
Not only that, but establishing a business in a free zone has several other advantages, such as 100% foreign ownership, 100% repatriation of capital and profits, 100% corporate and personal income tax exemptions, and exemption from all import and export duties.
4.1. Further details
However, import into the UAE is not permitted. A Dubai Mainland company, on the other hand, must have office space and obtain government approval to incorporate. Aside from that, non-UAE nationals can only own 49% of their company, with the remainder going to a local sponsor.
Most business people prefer free trade zones in the UAE because they can benefit from 100% foreign company ownership, which is not available with a Mainland company. But not any longer. As you are aware, following the amendment to the CCL by the UAE cabinet to boost the country’s competitive edge and facilitate doing business; you can incorporate a company in Dubai mainland with full ownership.
5. Benefits of forming a company on the Mainland
The most significant advantage of having a Mainland firm is that their business activities are not limited to any specific area/s, unlike free zone companies; this allows them to freely trade. This means they can trade with any firm, public or private, and no matter where they are located within and outside of the UAE – free zones, onshore and offshore.
The broader the scope, the better the opportunities for global expansion, opening the door to a plethora of opportunities and higher profits. Furthermore, who would not want to work on government projects with less competition? Other advantages of establishing a Mainland company in the UAE include no minimum capital requirement and the possibility of obtaining a residence visa.
Although there are numerous advantages to doing business on the UAE Mainland, just one disadvantage, 49% ownership, appears to be a deal-breaker. Because of the new law, this is no longer applicable. And they have added one more benefit to the list: complete ownership.
6. Significance of full foreign ownership in the UAE
100 ownership in Dubai is certain to increase investment in the UAE and contribute to the nation’s economy. This step by the UAE government will also strengthen the UAE’s position on the global investment map, where industrial activities can be carried out with complete ownership by a foreign and legal non-citizen.
Hence, gaining 100% foreign ownership in the UAE is extremely important. You, as an ex-pat business owner:
- You do not need to look for an Emirati partner to join your company, which means you can fully own it.
- It is no longer necessary to negotiate and debate with UAE partners to obtain a 51% stake in the company’s capital.
- You will have more control over how you manage and plan your work.
- Have more freedom to expand your business outside of free zone areas throughout the UAE.
- Furthermore, the previous 49% ownership law cannot prevent you from materializing your dream of opening your own business in Dubai or any other UAE emirate. Bonus? Following the issuance of the long-term investor visa, you will be able to enjoy a long-term stay in your preferred emirate.
7. Updates on the UAE Mainland establishment’s 100% foreign ownership
Before the implementation of the new law, ex-pats were required to find a local sponsor and appoint them to the company that would hold 51% of the total shareholding. The local sponsor would also have additional duties and rights, and in some cases, the parties would enter into a side agreement to ensure that the foreign ex-pat has complete operational control.
However, beginning June 1, 2021, a foreign entity or person may invest and own up to 100% of the total shareholding in a company in the UAE; removing the previous mandatory requirement of a local sponsor.
The Dubai Economic Department, on the other hand, explained that full ownership does not bring any change to current procedures or licensing requirements, except that it is no longer mandatory to have a local sponsor or specify a fixed quota ratio for him/her.
So, according to the legal procedures followed, a reduction in the percentage share of the Emirati partner from 51% of his/her withdrawal from the partnership is possible. With the most recent changes to CCL, the majority of the previous restrictions imposed on foreign entities have been lifted.
7.1. More information
You may be wondering if any hidden surprises are lurking behind this new law. And if not, why would one form a company in a free zone? After all, this was one of the main reasons people chose free zones over the Mainland to trade. Continue reading for more information.
- Get some advice that 100 foreign ownership in Dubai has been approved for certain business activities (under commercial and industrial licenses), but only for a limited number of companies. And yours is almost certainly one of them.
- The best part is that there are no additional fees to request that changes be made to existing trade licenses.
- You do not even have to pay any extra money to make these changes to existing trade licenses.
- In the UAE, 100% is still not permitted for ‘professional licenses.’ For example, you need a professional license to open a salon or a restaurant, and you cannot fully own them if you open them on the mainland.
- In addition to full ownership in mainland UAE companies, foreign company branches in the UAE no longer need to find a ‘National Service Agent’ (NSA).
- Commercial activities that are now eligible for 100% foreign ownership in the UAE include, among others, general trading, gold, pearls, jewelry, cars, luxury watches, food, and others.
- Among the industrial segments that now qualify for 100% foreign ownership in the UAE are construction, building materials, water production, paint, food, flooring, flooring metal, and so on.
- In light of the new changes, the steps for reducing the Emirati partner’s share capital from 51% of their complete withdrawal from the company’s trade license can be taken.
- With a limited liability structure and 100% foreign ownership, limited liability companies can be converted to single-person ownership.
8. The UAE allows for full foreign ownership in thirteen industries
The UAE Cabinet adopted a positive list of activities for 100% ownership in the UAE covered by Article 7-3 of the UAE Federal Law No. 19 of 2018 on Foreign Direct Investment. In this sense, the UAE offers 100% foreign ownership in 122 economic activities activities across thirteen sectors:
- Transportation and storage.
- Agriculture.
- Space.
- Manufacturing.
- Renewable energy.
- Hospitality and food services.
- Information and communication.
- Professional.
- Scientific and technical activities.
- Administrative and support services.
- Educational activities.
- Healthcare.
- Art and entertainment.
9. How can Connect FZ help you get 100 ownership in Dubai?
Foreign 100% ownership in the UAE is taking a revolutionary step. The UAE’s supportive government has amended the Federal Commercial Companies Law (CCL). Connect FZ will keep you updated on these changes. Furthermore, we evaluate your business model and make recommendations to ensure that your venture is eligible for 100% foreign ownership in Sharjah or Dubai, or any other emirate.
Moreover, because the law is relatively new, integration between various governmental departments will take time. To avoid confusion and learn more about how Connect FZ can assist you in obtaining 100% ownership of a business in the UAE; you can schedule a free consultation with one of our Legal Corporate Advisors. On the other hand, we invite you to look at our value-added services.
Do you have any questions for us? You can contact us. Let us know any inquiries you may have regarding the DED 100% foreign ownership list and how we can assist you. We can also talk to you about the foreign ownership restrictions to solve all your doubts. Our contact number is +971 43 316 688. Email us at contact@connectfz.com.
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