New Dubai Regulation Allows 100% Foreign Ownership in Dubai Mainland

The United Arab Emirates (UAE) has always been very prompt in introducing policies and making amendments to their existing law to match the growing demands in the market. As a result, the country has always created a favourable environment for investors and entrepreneurs from every region. In the last couple of decades, UAE has shown a promising growth potential. Among many such new laws and amendments is the recent law in which the government decided to allow 100% ownership in Dubai Mainland for foreign investors and businesses.

What has the Amendment Changed?

This new regulation eliminates the need for a local Emirati service agent or sponsors for company formation in Dubai. In addition, the amendments in the corporate law to permit businesses 100% foreign ownership in Dubai will undoubtedly lead to a swell of foreign investors in the country.

The law is effective from 1 June 2021. However, proper implementation was made effective from the fourth quarter of 2021. This included documentation, the addition of relevant corrections in the system, the likelihood of grave errors, and doubts that arise when new rules are introduced.

The Key Factors of the New Law

• Local Emirati sponsors, who held 51% of company shares, will not be needed.
• The foreign nationals (no matter which country) can now possess 100% ownership in the business in Dubai Mainland, which was just 49% earlier after giving 51% to local sponsors.
• The amendment also eliminates the need for a UAE citizen to act as a local agent to set up a branch of a foreign company.
• The 100% foreign ownership in Dubai is not applicable for telecommunication, oil, gas, and utility companies.

Key Points in the New Ruling

The 100% business ownership in Dubai Mainland will clear some of the existing rulings. It will make the operations easier for companies.

The key points in the 100% ownership in Dubai are:

• Now ex-pats will be qualified for 100% foreign ownership in Dubai Mainland jurisdiction, subject to guidelines communicated. Earlier, this was limited only to Free Zone businesses.
• There is no need for local Emirati shareholders and local service agents for company registration in Dubai. This removes the complication of finding a reliable Emirati partner for company formation in the Dubai Mainland.
• Now the ex-pat can be on the board of directors of the company. This was not allowed earlier.
• The share percentage that can be sold through IPO has been increased from 30% to 70%.
• Local governments now have the authority to communicate specific rulings, issue approvals, and command company formation rules in their jurisdictions.
• The companies can now schedule online meets and conferences. Physical meetings are no more necessary. Electronic voting is also permitted during the Annual General Meeting of the company. This ruling is a welcome move for expatriates to attend AGMs.
• Now ex-pats can supervise the meetings. So, there is no need for a local national for the same.
• Note that authorities can sack executive officers or company chairs if they do not work as per the prescribed guidelines or do not maintain the dignity to the rank expected.

How will this New Corporate Law Benefit UAE?

• It will take the ease of doing business further.
• Create a productive and profitable atmosphere for foreign investors.
• The country will be ready for future challenges.
• It will ensure the support of the global business community in strengthening the economy.
• The 100% ownership in Dubai Mainland for businesses will establish the above factors.
• It will also lure reputed expatriate investors into encouraging the country’s growth prospects extensively.

How will it Affect Businesses in the UAE?

100% foreign ownership in Dubai Mainland businesses is a welcome move for the global business community. It is hailed as a visionary approach and is expected to strengthen the economy of Dubai and the UAE massively. The rule will benefit both new and existing businesses.

Need Assistance for Your Business Setup in Dubai Mainland?

If you plan for a business setup in Dubai Mainland, there could be no better time than this. Contact us at OBK Business Centre and let us assist you in forming a company in Dubai Mainland, with 100% ownership. Call us now @+971 (0) 52 640 2550!