UAE law allowing 100% foreign ownership now in force

The law establishes ‘positive’ and ‘negative’ lists of sectors open to more than 49 per cent foreign investment



A law allowing 100 per cent foreign ownership of companies in the UAE is now in force after being published in the country’s Official Gazette.

The long-awaited law is designed to make the country more attractive for investors while limiting the impact on local businesses, officials have said.

Read: UAE law allowing 100% foreign ownership to apply selectively, won’t hurt locals

Foreign companies seeking to establish an entity onshore in the UAE would previously have to team up with a UAE national, who was required to own 51 per cent of the shares of the company.

Law firm Clyde & Co confirmed the law’s publication on Sunday afternoon.

Among the key details is a framework allowing the UAE Cabinet to exercise its powers to permit increased levels of foreign ownership, it said.

Clarification regarding the steps required of companies to apply to own more than 49 per cent of shares in selected sectors of the economy were also revealed.

Sectors restricted from 100 per cent foreign ownership appear on a ‘negative list’.

They include:

  • Oil exploration and production
  • Investigation, security, military (including manufacturing of military weapons, explosives, dress, and equipment)
  • Banking and financing activities
  • Insurance
  • Pilgrimage and Umrah services
  • Certain recruitment activities
  • Water and electricity provision
  • Fishing and related services
  • Post, telecommunication and other audio visual services
  • Road and air transport
  • Printing and publishing
  • Commercial agency
  • Medical retail (including pharmacies)
  • Blood banks, quarantines and venom/poison banks

A separate ‘positive list’ covers sectors open to greater foreign investment. However, the new law allows the cabinet to add or remove sectors on each list at a later date, Clyde & Co said.

Details of sectors on the positive list are not mentioned in the new law, but are expected to include the manufacturing and service industries.

Read: UAE Cabinet approves 10-year visas, will allow 100% foreign ownership by year-end

When a sector is added to the list, the cabinet can mandate that a company or its shareholders meet certain requirements before greater foreign investment is allowed.

Clyde & Co said these:

  • Mandate the level of foreign ownership permitted in the relevant sector (which could be 100 per cent, but could also be less than 100 per cent)
  • Place restrictions or requirements in respect of the type of legal entity which may carry on business in the relevant sector
  • Apply minimum capital requirements
  • Impose Emiratisation requirements and allow greater levels of foreign ownership than is currently the case in specific emirates (not across the UAE)

Foreign investors that apply for permission to increase their foreign ownership percentage can be rejected but may appeal the decision under the FDI law.

Investors can also apply to increase their ownership of businesses in sectors not included on the negative or positive lists but are expected to face stiffer requirements to do so.

Government bodies established under the new law, the Foreign Direct Investment Unit and Foreign Direct Investment Committee, will administer investment in the country.

Read: UAE President issues foreign direct investment decree