When it comes to setting up a business in the UAE, many prefer the 100% company ownership UAE ownership of their business. However, foreign investors couldn’t do this, only UAE nationals could have 100% of their corporations.
Expats had to have a local agent or sponsor, which had to be a UAE national. This applied when they wanted to set up an LLC business. Nevertheless, it’s important to note that some legal structures allowed 100% ownership for foreign investors. But these may not have as many advantages.
But everything has changed now because of the amendments the authorities made to the Commercial Companies Law (CCL) as of 1 June 2021. The implementation of this change can be interpreted as a great news for the UAE’s business community.
If you’re interested in setting up a business in the UAE, you can now have a Dubai mainland company 100% ownership. Let’s take a look to the latest changes and what they mean for foreign investors. The implications for those interested in establishing their presence in the country.
What has Changed?
Before starting to analyze the implications of these changes, it’s important to clarify what has been changed.
Essentially, the laws regarding the provisions for establishing a business with a limited liability structure has changed. This means that a Limited Liability Company, known as LLC, can now have a single owner.
Being more precise, the Federal Decree-Law No. (26) of 2020 was announced an it has an amendment of Federal Law No. 2 (2) of 2015 in relation with ownership of commercial companies.
What’s the Latest Change in 2021
These changes have resonated tremendously among the business community. For this reason, Dubai Economy has issued guidelines to clarify the procedures in relation to full ownership for foreign investors.
This way, the authorities can have a better control of this aspect. And expats can know how to comply with the regulations.
These changes are effective from 1 June 2021. Foreign investors that want to establish their presence with total ownership can carry out the process through the following channels:
- Dubai Economy portal
- Invest in Dubai Digital platform
What happens with existing LLCs?
Since some foreign investors have establish their business already as an LLC with an Emirati partner, they may wonder if they now can have 100 ownership in Dubai mainland.
Regarding the status of existing LLCs with an UAE national as a partner, it depends on the partners’ decision if they want to make any changes. Dubai Economy stated that partners can follow the necessary legal procedures if they want to make a reduction of the percentage of share of the Emirati partner or if he or she wants to withdraw from the partnership.
Which changes does full ownership make to current procedures for licensing?
Companies must get their business license to operate legally in the UAE. But, it’s important to note that 100 ownership for foreign investors in UAE doesn’t change anything related to the procedures to get the business license.
The only change is that it’s not mandatory to have an Emirati partner. Thus it’s not necessary to specify a fixed quota ratio for said partner.
In addition, it’s important to note that it’s not necessary to pay for additional fees for full ownership. And it’s also not necessary to give additional guarantees or capital.
What were the regulations before the change?
Foreign investors that wanted to set up an LLC in the UAE had limitations. According to the previous regulations, expats were allowed to own a maximum of 49% of the company. And the remaining 51% had to be owned by a UAE national, typically known as an Emirati sponsor or partner.
Nevertheless, expats were allowed to have 100% company ownership UAE. But it was only limited to a few business activities and services in the professional sector as well as certain free zones.
With these changes, foreign investors can now own 100% of their business. And they can get rid of the limitations regarding of the percentage that had to be owned by UAE nationals.
This is great news for entrepreneurs and business owners, natural and legal persons, since they can establish their presence in the UAE mainland without having to look for a local partner.
When will the implementation start?
The implementation of this amendment was effective from 1 June 2021. Since that date, more than 59 business owners have benefited from this decision.
Therefore, if you’re an investor looking for starting your business in Dubai, you can also take advantage of this new regulation.
When it comes to establishing an LLC, you can receive a lot of advantages, such as conducting business in the entire UAE territory. This is a huge benefit because this way you can offer your products and services to a wider audience.
Will this change apply for Dubai Mainland?
Setting up a business in Dubai Mainland provides several advantages to business owners. With the previous regulations, expats couldn’t have 100% ownership of their business in an LLC in Dubai Mainland.
Given this news, many individuals wonder if Dubai mainland company 100% ownership will be available. The good news is that foreign investors can now set up a company in Dubai Mainland with full ownership.
It’s not necessary to have an Emirati sponsor or local agent, and this no longer will be a requirement regarding LLC incorporation.
Full list of activities open for 100% foreign ownership
As we mentioned before, the 100% company ownership UAE for expats had limitations regarding the number of activities. Now, with the latest changes, the list has been expanded and now there are more than 1000 activities that foreign expats can carry out with complete ownership of their businesses.
Some of the commercial and industrial activities are contracting, automobile, trading, transportation, manufacturing, recycling and more.
Which business activities can have 100% ownership?
Investors have started to take advantage of this new regulation. This is because the list of business activities that allow complete foreign ownership has increased. Among the commercial activities we can mention general trade, jewelry, contracting, pearls, gold, foods, and cars trading and more.
Regarding the industrial category, we can mention the sectors of construction, metal, flooring, foods, water production and more.
What is the Eligibility Criteria for 100% ownership of business
Once we understand the changes and its implications for establishing a business in the UAE, there’s one more topic in relation to this matter. We’re talking about eligibility criteria. Before deciding to set up your business with 100% company ownership UAE, you must know if your business activity is eligible.
Keep in mind that the first step for incorporating an LLC is choosing a business activity. So, you must choose one that allows you to have 100% ownership. In addition, you must know that each Emirate has its own set of regulations, so be sure to check the eligibility of your desired jurisdiction.
In case your preferred business activity isn’t eligible, you could check in other Emirates to see if it’s eligible. Or you can change it, so you can opt for 100% ownership.
Dubai is perhaps the top destination for business owners who want to enter the UAE market. In this regard, it’s important to know which business activities are eligible.
When it comes to 100% ownership in Dubai mainland activities, the revised law applies to 1061 business activities out of the 2300 total on the list issued by the DED. This means that at least half of the business activities from all sectors can qualify for full ownership.
In relation to professional services activities, entrepreneurs are the ones that get benefits from the 100% company ownership UAE. Nevertheless, it’s important to note that they’re still required to have a local service agent and they can’t select an LLC as their business structure, instead they have to follow the sole establishment legal structure.
– Abu Dhabi
Abu Dhabi is another great place to conduct businesses, for this reason, expats who want to enter this market has received the 100 company ownership UAE news with excitement.
Unfortunately, the majority of the trading activities in Abu Dhabi don’t qualify for full ownership. So, foreign investors still need to find an Emirati sponsor and follow the 51%-49% provision for shareholders.
– Other Emirates
Other Emirates have yet to devise their regulations regarding the 100% company ownership UAE changes. It’s important to note that each Emirate has its own set of rules, so while Dubai and Abu Dhabi have updated their law regarding full ownership, we must wait for the other Emirates to announce their regulations in this matter.
Why were the regulations changed to allow foreign investors to hold 100% of the company?
Before the changes for 100% company ownership UAE were made, foreign investors had to look for an Emirati partner since this was established by the authorities.
The UAE Government was very strict regarding the previous regulation regarding full ownership for expats, so many business owners wonder what the reason behind this change is.
It’s important to note that this is strategic decision that the UAE has made with the aim to increase the country’s investment attractiveness.
The UAE has a privileged location on the global business map, thus they want to take advantage of this fact. In addition, given the economy upheaval caused by the COVID-19 pandemic, the UAE wants to recover their economy thanks to foreign investment.
What are the reasons behind these changes?
Let’s observe some of the reasons behind the revision of the laws to allow 100% ownership:
- Update the current legislative environment to make it fertile for foreign investors to establish their company
- Boost the country’s economy by facilitating ownership to expats that look the UAE market as a promising one.
- Improve the processes for doing businesses
- Enhance the investment and commercial opportunities that will shape the future economy
- Increase competitiveness in the business environment. This is with the purpose of staying in tune with worldwide economic changes
- Give a suitable response to the UAE’s business community needs
- Set the country as an attractive place for expat investors, entrepreneurs, and startups.
What do these changes mean for the UAE’s economy?
The UAE, and specially Dubai, are among the ideal investment destination for business owners. However, the limitations regarding full ownership refrained expats from setting up a company in this place.
But, with the amendments to the regulations, the UAE’s economy will accelerate. In addition, it will put Dubai, which is already in high rankings as a top destination for investment, as one of the leading places for making businesses.
With this new full ownership regulation for foreign investors, the supportive policies for setting up a company, and the ease of doing business, the UAE is looking to boost their economy by attracting wealthy investors that want to have 100% ownership of their business.
Do you need assistance from a service provider?
Given the new regulations regarding full ownership, business owners can now have their LLCs without needing a local sponsor.
However, it’s important to note that the integration will take time. For this reason, if you’re planning on setting up a company, you must have a legal team readily available to help you.
In case you need assistance navigating through the process of incorporating your LLC so you can obtain 100 percent ownership, you can contact a consultant team to receive help.
From gathering all the required documents and obtaining approvals from government agencies, Connect Zone can assist you through all these stages.
Just contact us at +971 4331 6688 or email@example.com and we will provide the necessary information.