What has changed?
The United Arab Emirates (UAE) government intends to further relax foreign ownership restrictions, allowing international investors to own 100% of companies operating in the UAE mainland and granting long-term residency permits for foreign investors for the first time.
In October 2017, the 2015 Federal Commercial Companies Law was amended by decree pursuant to Law No. 18 of 2017 exempting certain companies and sectors (not yet identified) from the 51% local ownership requirement applicable to UAE mainland companies. The government has now gone one step further.
On 20 May 2018, the UAE Council of Ministers passed, amongst other matters, a resolution allowing 100% ownership of mainland companies in the UAE, with His Highness Sheikh Mohammed Bin Rashid Al Maktoum, the Vice President and Prime Minister of the United Arab Emirates, and Ruler of the Emirate of Dubai, instructing the relevant authorities to implement the resolution by the end of 2018.
The Council also announced that the UAE will grant long-term residency permits (up to 10 years) for foreign investors and professionals with certain specializations as well as outstanding graduates.
What does this mean?
This resolution will provide greater certainty and stability for investors and professionals, which are crucial for economic success. This latest key development highlights the UAE’s commitment to widening the scope of foreign investment legislation, coming immediately after the UAE’s introduction of a new Federal Arbitration Law, and reinforces the country’s commitment to becoming the primary destination for international investment, innovation and entrepreneurship in the Middle East.
The relaxation of foreign ownership restrictions, once implemented, will attract significant new interest from international investors and likely lead to the restructuring of many existing investment structures.
What do you need to do?
As no further details have been announced to date on the criteria that will apply to define global investors and on the specific sectors that will benefit from the relaxation of foreign ownership restrictions, there are no immediate steps that companies need to take. However, once the resolution is implemented (expected by end 2018), companies may wish to review their current commercial arrangements and local shareholding structures on the UAE mainland, and foreign investors will be able to consider a new and more business-friendly array of options open to them for structuring their investments in the UAE.
The formal resolution from the Council of Ministers is not yet available for consultation. However, we will monitor the implementation of this resolution and update you on the scope of the new legislation as and when developments arise.