Significant UAE Amendments
What You Need to Know??
The UAE took another step towards financing and building of productive infrastructure, by announcing significant amendment series to the countryâ€™s laws for commercial companies in November 2020.
The UAE were generally subject to strict foreign ownership restrictions and these landmark changes to:
â–ªï¸ The UAE commercial company ownership laws to attract foreign investors, entrepreneurs.
â–ªï¸ To improve the ease of doing business in the country and their regulatory environments.
Updation on Foreign Ownership and Investment Rule in UAE
Sheikh Khalifa bin Zayed Al Nahyan, the president of the United Arab Emirates issued a decree to catch up the rules relating to foreign ownership of companies in the UAE, by presenting significant amendments to the UAE Commercial Companies Law No. 2 of 2015 on 23 November 2020. This becomes as part of the UAE governmentâ€™s efforts to attract foreign investors and to promote the countryâ€™s economy.
The decree, which introduces significant amendments to the UAE Federal Law No. 2 of 2015 on Commercial Companies, neutralize the requirement for commercial companies to have a major Emirati shareholder or agent, providing full foreign ownership of onshore companies.
Under the new amendments:
â–ªï¸ Businesses can now be fully established by non-Emiratis of all nationalities, with companies now having a maximum of one year to comply with the amended law from the time its articles become effective.
Few key changes
The Decree introduces:
â–ªï¸ The Decree removes the requirement under the Companies Law to have a UAE shareholder holding at least 51 % of a companyâ€™s issued share capital.
â–ªï¸ A foreign parent company may no longer need to appoint a UAE national agent for its onshore branch.
â–ªï¸ The Decree drops Federal Law No. 19 of 2018 on UAEâ€™s Foreign Direct Investment.
â–ªï¸ Foreign shareholders are allowed to own up to 49% of a limited liability company.
â–ªï¸ The local sponsor holds the 51% majority.
â–ªï¸ The new UAE company rules have compensated the need for a local sponsor for companies operating as an onshore UAE business.These amendments replaced the Foreign Direct Investment Law (FDI Law) of 2018.
â–ªï¸ The FDI Law had allowed 100% foreign ownership of businesses of certain categories, on a case-by-case basis reported the state news agency, WAM.
The decree allows relevant local authorities a set of powers including:
â–ªï¸ Setting a specific percentage of Emiratis in the capital allocation boards of directors of companies.
â–ªï¸ Approving requests to establish companies except for joint stock companies.
â–ªï¸ Identifying fees & charges according to the policies adopted by the UAE Cabinet.
Amendments to commercial companyâ€™s law
These new UAE commercial company laws 2020 will help to:
â–ªï¸ Enhance the legislative environment, and encourage more foreign investment in the country.
â–ªï¸ It follows a slew of other landmark changes to existing laws in recent years
â–ªï¸ The introduction of long-term visas in the UAE.
â–ªï¸ The opening of the freehold market in Abu Dhabi.
Most recently, there were amendments to personal laws in the UAE as well, regarding inheritance, cohabitation, alcohol consumption and more. The emirateâ€™s strategic location, world-class lifestyle and favourable business environment make it a desired destination.
This concludes our handy guide on the, new commercial company laws in the UAE!
You may know more about the various types of licenses required to operate a business in UAE. Itâ€™s also a good idea to hire a consultant to improve overall business performance and also for assisting with the various legal and financial procedures to make a perfect sense.
You can also start a business in one of the free zones in the country, which offer 100% ownership by foreign nationals and exemption from VAT registration, customs and more.