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NEWS July 04 2019

Sectors Eligible for 100% Foreign Ownership Announced

By Yasmin Al Sughayyer, Associate, Litigation Department

 

On 2nd July, 2019 the UAE Cabinet, chaired by His Highness Sheikh Mohammed bin Rashid Al Maktoum, announced the industry sectors eligible for 100% foreign ownership. The business community has been waiting for this announcement since the Foreign Direct Investment (FDI) Law was published in the UAE’s Official Gazette in November 2018.

 

Legislation

The ‘positive list’, which includes 122 commercial activities across 13 sectors, takes into consideration that the percentage of foreign ownership will be determined by each activity and sector. Meaning certain businesses may now be owned wholly by foreign investors, while others will still require a local partner.

The sectors selected for 100% foreign ownership are; agricultural (19 activities), industrial (51 activities) and services (52 activities) the full list (in Arabic) can be found here.

Potential investors should be aware of the following restrictions:

1-      The minimal capital of the company

2-      Requirement of registering at “Tawteen Club” at the Ministry of Human Resources and Emiratisation

3-      Obtainment of certain licenses from the concerned authorities

4-      The activity should be productive and implement modern research and developing methods

5-      The activity should sustain a higher income

6-      Using modern technology programs and mechanisms on the production operations.

 

Restrictions

The ‘negative list’ contains certain activities which are considered to be pivotal to the economy of the UAE, where foreign investment would naturally be restricted. Sectors such as oil & gas, banking, utilities, road and air transport, telecoms and medical retail (including pharmacies) are not open to 100% foreign ownership.

 

Benefits of the change

1-      Attract more global investors

2-      Enable foreign investors to avoid any conflict they may face as a result of being forced to enter into a contract with a local partner, with the limit of 49% shares

3-      If there is a dispute in a LLC, having one owner makes it easier and faster for courts to issue their judgements

4-      It will rapidly accelerate the UAE economy

We are currently following up with the relevant ministries in the UAE to ascertain exactly how to obtain 100% foreign ownership and will publish an update in the near future.

 

Yasmin is an associate in our Litigation Department. For further information on the FDI Law Yasmin can be contacted on 04 354 4444.

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