The United Arab Emirates (the “UAE”) government has broadened foreign
investment opportunities in revising its long-established foreign ownership
restriction.

The Amendments

According to Article 10 of the Federal Law No. 2 of 2015 on Commercial Companies Law (the
“CCL”), UAE companies must have a minimum of 51% of their shares owned by one or more
UAE nationals, leaving foreign investors to hold no more than 49% of the shares.

In the hopes of further advancing investment opportunities in the United Arab Emirates, the longestablished foreign ownership restriction has been amended by the government through the
Federal Decree-Law No. 26 of 2020 (the “Amending Law”), allowing for a full 100% foreign
ownership of UAE onshore or mainland companies taking part in specific activities and sectors.

Furthermore, the requirement for branches and representative offices of foreign companies to
appoint a UAE National Service Agent (“NSA”) has also been repealed by the Amending Law.

Activities and Industries Eligible for 100% Foreign Ownership

Effective on the 1st of June 2021, the new foreign investment regime has made full foreign
ownership of onshore companies available for more than 1,000 activities from the commercial
and industrial sectors. However, it should be noted that eligible activities may still vary between
the Emirates. Some notable sectors eligible for full foreign ownership include:

contracting;

• hospitality;
• transportation;
• manufacturing and production;
• maintenance and repair (Abu Dhabi only);
• hospitals (Abu Dhabi only); and
• investment and trade (Dubai only).

The complete list of activities eligible for 100% foreign ownership by the Dubai Department of
Economic Development can be found here, and the Abu Dhabi Department of Economic
Development’s list is available here.

It is important to note that foreign ownership is still restricted in economic activities and sectors
considered to have a “strategic impact” and are subject to additional licensing requirements. As
per the UAE Cabinet Resolution No. 55 of 2021, such restricted sectors include:

• finance, banking and insurance;
• security and defence;
• money printing;
• telecommunications;
• pilgrimage and Umra activities;
• Quran memorisation centres; and
• services related to fisheries.

Effect/Impact

The Amending Law not only applies to new companies but to already existing ones too. This
would mean existing companies with activities eligible for full foreign ownership are now able to
consider the restructuring of their shareholding structure. In such a case, shares held by the
Emirati partner(s) can be transferred to the foreign partner(s) through the use of a notarised
document.

Furthermore, some foreign companies are now taking steps to remove their UAE NSA, which was
initially a requirement for branches and representative offices of foreign companies, another
requirement that was repealed by the Amending Law.

Conclusion

With 100% foreign ownership available for new and existing companies, foreign investment in the
UAE is expected to increase. Moreover, with new compliance regulations in relation to Ultimate
Beneficiary Owners and the Economic Substance Regulations, there is likely to be even greater
investor confidence opening business opportunities for both foreign and local businesses, further
guaranteeing the UAE’s place amongst the world’s top business hubs.

Disclaimer

This article is for informational purposes only and shall not be considered as legal advice or
opinion.