MAINLAND/ LOCAL MARKET COMPANY
The UAE Commercial Companies Law (the “CCL”) has been amended to permit 100% foreign ownership of companies incorporated in the UAE under the CCL. The UAE Ministry of Economy announced that the foreign ownership amendment would be effective on 1 June 2021.
Traditionally, 100% foreign ownership of a UAE company was only possible under two circumstances – when setting up in a free zone, or when establishing a professional services company.
Until now, overseas entrepreneurs wishing to set up on the mainland are currently faced with the prospect of working with a local shareholder who must hold a 51% stake in the company. Although there is plenty of support available to help find suitable local partners, this process can be daunting for first-time entrepreneurs looking to set up in a new country.
However, this is set to change. In an official announcement, on this year, HH Sheikh Mohammed bin Rashid Al Maktoum declared that following a cabinet meeting, ‘we decided to allow 100% foreign ownership of companies in UAE’.
While still in its early stages, this announcement appears to be great news for the UAE economy – and of course overseas investors looking to do business in the Emirates.
The Department of Economic Development (“DED”) of each Emirate will specify business activities open to 100% foreign ownership. The Dubai DED has announced that its list will include more than 1,000 commercial and industrial license activities. The discretion of each Emirate’s DED in determining which activities may be conducted by a foreign owned-Onshore Company may result in different foreign ownership regimes applying to companies operating in the same sector, depending on which one of the Emirates an entity is incorporated in.
Can Existing Companies have Full Ownership and remove Local sponsor from the License?
The companies that already operate in Dubai mainland with a Local Sponsor can attain 100% ownership. However, the status of such companies will remain unchanged. For instance, it is not possible to change the legal structure of a foreign company from an LLC to a Sole Proprietorship under a foreign name. The investors can transfer the license to a one-person company with limited liability. The investors can either reduce the percentage share of the UAE National Partner or request for his withdrawal from shareholding. Consult with the best business setup consultants in Dubai to clear the doubts regarding this process