The UAE has been always evolving with the introduction of policy amendments and changes in core concepts. Offering a red carpet welcome for the investors and entrepreneurs from every region, the country exhibited a promising growth prospect. Another decision in the same line is the latest law allowing 100% ownership in Dubai Mainland for expat businesspersons.
This new regulation removes the requirement of a local Emirati sponsor for company formation in Dubai. The decision to permit businesses 100% foreign ownership in Dubai will definitely lead to a surge of expatriate businesspersons in the country. Delivering the country with a stronger financial stature than before and phenomenal growth surpassing the past trends.
What has the amendment changed?
In direct terms, the new policy has removed the requirement of a local sponsor for setting up businesses. With the new law in place, many companies with complete foreign ownership will come up in Dubai. The law is effective from 01st June 2021. Nonetheless, the complete implementation would be effected from the fourth quarter of 2021 only. The documentation part, the inclusion of relevant corrections in the system, and the possibility of teething troubles, as well as, ambiguities with the new rule
The key features of the new rule permitting 100% foreign ownership in Dubai businesses are:
- Local Emirati sponsors, who will hold 51% shares in the company, will not be required.
- The foreign national, irrespective of his or her country, can own 100% of the shares in the business in Dubai Mainland.
- With this amendment, the setting up of a branch of a foreign company doesn’t need a UAE citizen to act as a local agent.
- The 100% foreign ownership in Dubai would not be applicable in the companies functioning in the telecommunication, oil, gas, and utility sector.
The new rule would benefit UAE in many ways, including:
- Enhancing the ease of doing business to the next level.
- Offering a productive scenario for the foreign investors.
- Making the country ready to meet future challenges and ensure the support of the global business community for fortifying the economy. The 100% ownership in Dubai Mainland business is definitely going to affirm these factors.
- Attract expatriate businesspersons with excellent track records to the country, to nourish the country’s growth prospects abundantly.
Key points in the new amendment
The 100 business ownership in Dubai will remove some of the existing directives. By this, the government is making the functioning of companies easier than ever. The key points in the new amendment of 100% ownership in Dubai are:
- 100% foreign ownership in Dubai Mainland jurisdiction, subject to guidelines promulgated. This was limited only to Free Zone companies earlier.
- Company registration in Dubai can be completed without local Emirati shareholders and local service agents. Thus, removing the complication involved in finding a reliable Emirati partner for establishing a company in Dubai Mainland.
- The expat can be on the board of directors of the company. This was prevented in accordance with the previous regulation.
- The percentage of shares that can be sold through IPO has been raised to 70% from 30%.
- Local governments are authorized to promulgate specific directives, issue approvals, and control company formation formalities in their jurisdictions.
- The companies can organize online meets and conferences, instead of physical meetings. Electronic voting is permitted during the Annual General Meeting of the company; a move helpful for the expatriate owners to attend AGMs without having the requirement to come physically to Dubai.
- Expats can preside over the meetings, no need for an Emirati to chair the same.
- Note that executive officers or company chairs can be removed if they don’t act in accordance with the stipulated guidelines or don’t maintain the dignity the position seeks.
How does 100% Ownership affect businesses in the UAE?
The decision to offer 100% foreign ownership in Dubai Mainland businesses is a welcome gesture from the progressive regime. It would augment the country’s development and strengthen the economy greatly.
Lauded as a visionary approach from the leadership, the 100% business ownership in Dubai would draw the roadmap for the country’s economic development in the forthcoming years. Shifting the focus from the oil and gas sector is considered to be a brilliant move, evaluating the uncertain global scenario in the future.
The move has already made headlines in the international media. And made the global business community plunge into the prolific business world in Dubai. The new rule to allow 100% ownership in Dubai Mainland business will have its implications on new and existing businesses.
- New Businesses in UAE Mainland – Expats can think of starting a company in Dubai without any concern. The removal of the mandatory requirement of a local Emirati sponsor is a welcome move to attract expatriate investors to the country. 100% foreign ownership in Dubai businesses will help you own the ownership of the company completely.
- Existing business in UAE mainland – Expat owners of an existing business in Dubai can sell the shares held with UAE nationals to foreigners. The requisite amendments can be included in the company policy documents accordingly. All the corrections and changes have to be completed by 02nd January 2022. This would also necessitate amendments in the Memorandum of Association (MOA), Article of Association (AOA), Quorum, meeting requirements, etc.
Are you an expat looking to set up a business in Dubai Mainland?
This is the right time for company formation in Dubai. Get in touch with us right away. We will help you to form a company in Dubai Mainland, with 100% ownership. Contact us now.