A UAE corporation could historically only have 100% foreign ownership in one of two situations: either it had to be established in a free zone or as a professional services firm. The customary rule up until recently required that 51% of the shares be owned by UAE citizens when foreign people wished to setup business in Dubai or the UAE. This stipulation was contained in the UAE Companies Law. This blog addresses the topic of business owners receiving 100% ownership in Dubai’s mainland and will dispel any lingering questions you may have about starting a business there.
What’s different now?
The emphasis of the updated laws is on the control of rules governing the formation of limited liability commercial entities. There may be one owner or many stockholders in a Limited Liability Company (LLC). Expats were only permitted to possess 100% of a limited number of businesses in the professional services sector and specific free zones in the UAE. In order to setup business in Dubai’s mainland, legitimate and legal individuals are thus permitted to do so without the necessity for a local partner.
Mainland company vs. free zone company
- The United Arab Emirates has roughly 45 economic zones where commerce in goods and services is permitted, frequently at reduced tax and customs rates. The remainder of the area, excluding the UAE’s free zones, lies on the mainland.
- The Mainland Area (onshore), Free Zone, and Offshore zones are where one can setup their firm if they wish to setup business in Dubai.
- Each region has its own set of advantages and disadvantages when it comes to business setup and is subject to a varied set of laws. The mainland region allows enterprises to conduct their business activities not only within the United Arab Emirates (including free zones), but also anywhere in the globe, unlike the free zone area, which only permits commerce within the free zones.
- Furthermore, setting up business in a free zone region of Dubai comes with a number of additional advantages, including 100% foreign ownership, 100% repatriation of capital and earnings, 100% exemption from corporate and personal income taxes, and exemption from all import and export tariffs.
- Into the mainland import UAE is not, however, allowed. A mainland corporation, on the other hand, needs office space and authorization from the government to establish. In addition, non-UAE nationals are only permitted to own 49% of their company’s stock, with the remaining 51% going to a local sponsor.
- The majority of businesspeople choose free trade zones in the United Arab Emirates in order to benefit from 100% foreign company ownership, which is not possible if your setup business in Dubai.
- You may now setup business in Dubai’s mainland with full ownership thanks to changes made to the CCL by the UAE cabinet in an effort to increase the nation’s competitiveness and make doing business easier.
Important aspects of the new amendment
The following are the main adjustments to shareholding patterns made by the new amendment:
- It removes the need that UAE enterprises setup business in Dubai have a majority of Emirates shareholders and local agents.
- 100% foreign ownership of enterprises based in the UAE is permitted, as long as they abide by the rules set forth in a cabinet resolution that was approved by the UAE cabinet.
- A joint-stock corporation is permitted to sell 70% of its shares through an IPO. Previously, if someone wanted to setup business in Dubai, this amount was as low as 30%.
- The shareholders have the right to take the firm to court if it engages in an activity through its directors and general managers that results in financial loss.
- It provides local governments with the authority to recognize the necessary capitalization, shareholding ratios, and approval for onshore company setups that are governed by cabinet resolution regulations. These authorities were previously only available to the Ministry of Economy or the Economic Departments of each Emirate when someone setup business in Dubai.
- No longer must an Emirate preside over corporate meetings; today anyone can attend, including foreigners.
- The restriction on foreign nationals serving on a company’s board of directors has also been waived while the company setup business in Dubai.
- The global epidemic has made electronic voting possible at annual general meetings.
- If executive or company chairs abuse their position of authority, there is a provision for their removal.
Things to Know About the UAE’s 100% Company Ownership Rule
- The regulation will support the growth of the commercial areas in Dubai. With the help of foreign investment and talent, eco-friendly activities including hybrid power plants, solar panels, and other green technology will expand.
- A favorable FDI law will entice new foreign investors from all over the world who see development potential in the Middle Eastern market’s high demand.
- Additionally, this action will make the world more competitive.
- The UAE’s economy will benefit from 100% foreign ownership and attract more foreign investment. This move by the UAE government would strengthen the country’s position in the global investment landscape, where it is allowed for foreigners who are not citizens to operate factories under their full control. Acquiring 100% foreign ownership in the UAE is quite significant.
- You don’t need to find an Emirati partner to join your firm as an expatriate business owner, thus you can entirely own the company when your setup business in Dubai.
- To obtain the 51% stake in the company’s capital, there is no longer a need to bargain and argue with UAE partners.
- Setting business in Dubai would give you more flexibility in how you manage and organize your job.
- You will have more room to grow your company outside of the UAE’s free zone regions.
- Additionally, the prior 49%-ownership law cannot prevent you from pursuing your desire of setting business in Dubai or another UAE emirate.
- Following the receipt of the long-term investor visa, you have the opportunity to take advantage of a prolonged stay in your preferred emirate.
UAE is determined that this act draws numerous foreigners who are willing to setup business in Dubai. They consequently think it boosts the economy’s 35% growth. All of the financial titans and government representatives are hopeful that the emirate’s worldwide economy will experience a sharp rise in competition as a result of this commercial law.
UAE is so evolving as a new international investor hotspot and a desirable location for an expanding economic center. The number of enterprises in the UAE is currently above 3 lakhs, and emirate authorities predict that number will rise to as much as 1 million in the next ten years.
Local and foreign entrepreneurs and investors have received assistance from LegalRaasta in taking the initial step toward setting up business in Dubai. Our qualified experts take care of all the procedures and legalities, allowing firms to focus on their core business activities. Contact us to learn more and avoid misconceptions. We’ll be glad to assist you.