At a meeting of the Cabinet of the Council of Ministers of the United Arab Emirates (“UAE”), the UAE Government decided to allow foreign investors to own 100% of their businesses in the UAE and approved sweeping changes to the current UAE visa system.
The changes were announced yesterday evening (20 May 2018), on Twitter, by Sheikh Mohammed Bin Rashid Al Maktoum, the Prime Minister of the United Arab Emirates and the Ruler of Dubai:
“At today's Cabinet meeting, we decided to allow 100% foreign ownership of companies in UAE, with a 10 year visa for investors, scientists, doctors, engineers, entrepreneurs and innovators. The UAE has always welcomed, and always will, innovators and business leaders.”
“This decision will be enforced by third quarter this year. Our open society, tolerant values, excellent infrastructure and flexible legislation offer the best environment for international investment and exceptional talent.”
Relaxation of national ownership requirements for UAE companies
Currently, foreign investors may hold 100% ownership of their companies in UAE’s free zones; however, within the rest of the UAE territory, generally companies must be at least 51% owned by UAE nationals (or companies wholly owned by UAE nationals), and companies operating within certain business sectors are subject to even higher percentages of national ownership requirements.
It is to be seen whether the 100% foreign ownership permission will apply across the board, or will be limited to certain industries. It is likely that a certain proportion of national ownership will continue to be required in companies acting within certain key industries.
It is expected that the new regime will be outlined in the new investment law, which, according to press reports is due to be published later this year.
Changes to visa rules
Currently, the UAE does not grant any long term residence visas to foreign nationals from outside the Gulf Cooperation Council countries. Visas are generally linked to the employment status of a person, and his or her employer (although non-employment related ‘partner’ or ‘investor’ visas can also be obtained in certain conditions) and are for a maximum of three years.
According to yesterday’s announcement, under the new regime, certain categories of expatriates (investors, scientists, doctors, engineers, entrepreneurs and innovators) will qualify for up to 10-year residency visas. In addition, according to press reports, students studying in the UAE will be able to obtain 5-year residency visas, with exceptional students being able to apply for extended 10-year visas. It is not clear how the new rules will affect the current UAE visa sponsorship system.
When will these changes come into effect?
According to Sheikh Mohammed’s messages, the new changes will be implemented starting with the third quarter of this year. Previous reports suggested that the new investment law should be published by the end of the year. It remains to be seen whether the visa changes will be provided for in the investment law or will be implemented earlier through Cabinet decision or similar legislation.
When implemented, these changes are likely to significantly alter the business environment in the UAE and have a tangible impact on the majority of UAE based businesses and (at least) certain categories of residents. While many questions remain unanswered for now, it is likely that more information will become available in the near future.