100% Foreign Ownership In The Mainland - IBG Consulting Dubai

100% Foreign Ownership In The Mainland

July 2, 2021by admin

The recent announcement by the Government of UAE will prove to change and revolutionize the future of business. The UAE government has allowed for 100% foreign ownership of businesses located in the mainland under certain conditions.

According to the Amendment in CCL of 100% foreign ownership that came into effect from June 1st, 2021, the UAE Ministry of Economy allowed foreign investors and entrepreneurs to fully own onshore businesses and companies.

The motive behind this announcement is to stimulate an increase in business activity and to attract even more foreign investment into the Emirates. This measure was extremely important given that Dubai’s economy has taken a major hit since the pandemic of COVID-19.

However, before you jump ship to start a sole proprietorship business in the Dubai mainland, or make drastic measures to cut out major shareholders, you must understand the conditions and intricacies that are involved in this announcement.


Who Can Own 100% Shares in UAE Mainland Companies?

The official announcement by The UAE Ministry of Economy allowed foreign investors and entrepreneurs to fully own onshore businesses and companies, starting from June 1st, 2021.

In addition to this, The Abu Dhabi Department of Economic Development (ADDED) also announced a list of 1,500 registered industrial and commercial activities open for legal non-citizens ownership. Such companies can be either partially or fully owned by foreign investors.

That is not all. The Sharjah Economic Development Department (SEDD) also issued a similar decree allowing complete foreign ownership policy of commercial and industrial companies in the UAE.


How to Avail 100% Foreign Ownership in Mainland

Previously, the mainland licenses allowed up to 49% foreign ownership, with 51% shares in the hands of an Emirati national.

According to the new law issued by the UAE Ministry of Economy, foreign investors and business owners can renew or apply for a new business mainland license with complete ownership in certain industrial activities.

However, it is important to note that the local government of each Emirates will retain the final authority to decide the actual foreign ownership percentage that can be up to 100% depending on the type of business.

You must reach out to the Department of Economic Development (DED) before your license expires. You will be required to submit your business proposal and documents supporting your business model and industrial activity for a final decision on ownership percentage.


Important Notes Regarding the New Foreign Ownership Law

There has been some degree of confusion regarding the new law and the conditions that it may or may not require. Therefore, it is extremely important to follow the guidelines and orders issued by the Dubai Economic Department (DED) in order to make a smooth transaction implementing the new law.

As such, please see the below important notes and action steps:

  • Investors can complete their procedures through service channels of DED or digitally through the ‘Invest in Dubai’ platform.
  • The status of existing business licenses in Dubai will remain unchanged including an Emirati partner as per the MOA signed with the partner.
  • The reduction in percentage share or complete withdrawal of Emirati partnership from 51% will be possible according to the legal procedures followed.
  • Full ownership of the business will not bring any change to the followed procedures and requirements.
  • Dubai economy also confirmed that there are no additional fees, capital or any guarantees required for full foreign ownership. For many investors, it is important to understand this protocol is strictly given by Dubai Economy therefore, do not fall for any agents in case they ask for any additional fees.
  • Changing the company legal form from LLC to a Sole Proprietorship will not be possible, though the existing licence can be transferred to a single person company with limited liability, according to the new existing laws.
  • The complete ownership will not be applicable for commercial agencies, as they are regulated by Commercial Agencies Law.


What are the Benefits of the New Complete Foreign Ownership Law?

The new law will bring about benefits to the government, foreign nationals, as well as to Emirati nationals.

The most important benefit to note will be the increase in business activity, which will serve to boost the entire UAE economy and Gross Domestic Product (GDP).

Furthermore, this law will bolster UAE’s position in the global investment map where industrial activities can be conducted with complete ownership by a foreign and legal non-citizen and attract a greater degree of foreign investment. It will improve the Emirate’s position as a global corporate and investment hub.

Finally, the decision will boost the confidence of investors in the Middle East market while reducing the cost of business operations and increasing the level of imports to the economy.


Need More Information About 100% Foreign Ownership in Mainland?

IBG Consulting is one the best in UAE for company formation services. We have expert business advisors that are equipped with vast industry knowledge and experience that benefits all our existing clients. If you are interested in having 100% foreign ownership in UAE mainland then IBG is the right choice! We can guide you on how the new law will support your business, and how you can make a smooth transition.

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