The implementation of amendments to the Commercial Companies Law (CCL) starting June 1, 2021, marks a significant milestone for the UAE’s business landscape. Expatriates are now granted to have 100% ownership of business in UAE, ushering in a new era for the country’s entrepreneurial community.
This blog will delve into the recent changes and their implications for entrepreneurs and the UAE economy. The latest regulations allowing foreign investors to own 100% of businesses in the UAE represent a revolutionary move towards establishing the region as the premier global business hub..
Table of Contents
What is new?
The updated regulations emphasize the oversight of provisions regarding the formation of commercial companies structured with limited liability. An LLC Dubai can now be owned by a single individual or by multiple shareholders.
What has changed?
Previously, expatriate business owners were restricted to owning a maximum of 49% of their companies, with the remaining 51% mandated to be held by a UAE national, also known as an Emirati sponsor or partner. Only select activities within the professional services sectors and specific free zones permitted foreigners to have full ownership (100%) in the UAE.
However, recent amendments have removed the requirement for foreign investors to have a minimum percentage of ownership by UAE nationals. This change enables both natural and legal persons to establish companies in the UAE mainland without the necessity of a local partner.
In practical terms, this means that expatriates can now benefit from 100% foreign ownership in the UAE by collaborating with a local service agent (LSA). The LSA assists with all paperwork and licensing procedures without holding any shares in the company, thereby placing decision-making authority firmly in the hands of the expatriate business owner.
Who is Eligible for 100% Ownership of Business in the UAE?
Who is eligible for 100% ownership of businesses in the UAE varies depending on the Emirate.
1. Dubai
In Dubai, the revised laws apply to approximately 1,061 out of the 2,300 total economic activities listed by the Department of Economic Development (DED). This means that around half of the business activities, spanning sectors like trading and manufacturing, qualify for 100% ownership by foreign investors.
For professional services activities, entrepreneurs can still enjoy 100% ownership, but they must utilize a local service agent and adhere to the sole establishment legal structure rather than an LLC.
2. Abu Dhabi:
In Abu Dhabi, the majority of trading activities still necessitate investors to partner with an Emirati sponsor, following the 51-49 shareholding provision.
3. Other Emirates:
The implementation of 100% ownership regulations varies across different Emirates. While Dubai and Abu Dhabi have already implemented updated regulations, other states are anticipated to develop their own. Once these regulations are introduced by the respective jurisdictions, foreign investors will have the opportunity to fully own their businesses.
To facilitate this process, company setup services act as silent business partners at a nominal cost, guiding investors through all the necessary procedures for establishing a business with 100% foreign ownership in the UAE.
Why were laws revised to allow 100% ownership of business?
The revision of laws to allow 100% ownership of businesses was driven by several key objectives:
- Cultivate a fertile legislative environment conducive to company establishments.
- Enhance the readiness of the country’s economy by facilitating 100% ownership of businesses in the UAE.
- Improve the ease of doing business within the country.
- Prepare for the future by stimulating investment and commercial opportunities.
- Enhance the competitiveness of the business environment to align with rapid economic changes and global developments.
- Address the evolving needs of the UAE business community.
- Significantly boost the country’s appeal to expat investors, businesses, and startups.
- Empower foreign investors by granting them complete operational and legal control over their businesses, free from unwanted intervention.
- Attract business aspirants worldwide to establish their businesses and enjoy the benefits of 100% foreign ownership in the UAE.
How to Establish a UAE Business with 100% Ownership
If you’re considering starting a business in UAE with 100% foreign ownership, the following steps can help guide you through the process. Collaborating with experienced professionals, such as Company Setup Consultants, can streamline your journey. Here’s a four-step overview:
1. Identify Your Business Activities:
Begin by defining the nature of your business activities. Ensure that your chosen activities align with the list of permitted activities published by the Department of Economic Development (DED) and allow for 100% foreign ownership. Your chosen activities can also influence the location and type of setup that best suits your needs.
2. Select and Register Your Company Name:
Choose a name for your business. Keep in mind that UAE naming conventions are strict, so avoid offensive or blasphemous language. Additionally, refrain from using names of well-known organizations and opt for full names instead of abbreviations when naming your company after yourself (e.g., “Dave Mann Consulting” instead of “D Mann Consulting”). company setup can assist in registering your chosen trade name.
3. Apply for Your Trade License:
Proceed to apply for your UAE trade license. This application is typically submitted to the local DED or equivalent authority in your selected emirate. Many times, this process can be completed online. Company Setup can manage the entire application process on your behalf.
4. Obtain Residency Visas:
To work in the UAE, you’ll need a residency visa. The visa application process involves several steps, including biometric scanning, blood tests, medical examinations, and chest X-rays. As the holder of a UAE trade license, you can also sponsor others for their visas, including family members or domestic workers like housekeepers.
5. Open a Corporate Bank Account:
Finally, establishing a corporate bank account is essential for conducting business in the UAE. Non-Gulf Cooperation Council (GCC) citizens may encounter challenges in securing banking services, making it advisable to partner with a local expert, such as company setup, to navigate this stage of the process.
Can you own 100% of a company in Dubai?
While the final authority to determine foreign ownership limitations based on business nature rests with the government of each emirate, in Dubai specifically, the amended law allows investors to achieve 100% ownership for 1,061 out of 2,300 economic activities listed by the Department of Economic Development (DED).
What is the foreign ownership limit in the UAE?
Currently, the law in the UAE allows for 100% foreign ownership of onshore companies, unless specific restrictions apply. For further insights into the historical evolution of this law and the restrictions that may be in place, please refer to our dedicated guide on foreign direct investment in the UAE.
Why Opt for the Services of Company Setup Consultants?
Company Setup Consultants, a trailblazer in offering expert company formation services, has been guiding both local and international entrepreneurs and investors since 2013. Over the past two decades, Company Setup has facilitated the establishment of more than 25,000 firms through its tailored business solutions.
With a comprehensive approach, Company Setup assists entrepreneurs in determining the most suitable jurisdiction, trade license, and corporate structure for their businesses. From obtaining necessary documents to securing approvals from government agencies for visas and licenses, Company Setup manages all steps and formalities, alleviating the burden of legal procedures from business owners.
The recent introduction of 100% ownership for foreign investors in the UAE marks a revolutionary step in the corporate business industry. Company Setup keeps clients informed about these regulatory changes and evaluates their business models to ensure eligibility for 100% foreign ownership.
Given the novelty of the law, the coordination between governmental departments may take time. To navigate this process seamlessly and gain insights into obtaining 100% ownership of businesses in the UAE, individuals can schedule a free consultation with Company Setup’s Legal Corporate Advisors.
To connect with Company Setup, individuals can call +97145187213, WhatsApp +971582595164, or send an email to info@companysetup.ae.
