The UAE government recently announced the abolition of restrictions pertaining to foreign ownership of onshore companies. This news has certainly paved the way for more economic growth in the sector as it allows expats to fully own a company without requiring a local sponsor and pay them a sponsorship fee every year.
Approved Activity List
After the announcement of this development, different emirates in the country have started to issue a list of activities approved for businesses owned by foreigners. Furthermore, they have also defined requirements that the entrepreneurs will have to meet to be able to fully own a company.
Dubai and Abu Dhabi have their distinct official activity lists. These lists are tentative as of yet and are subject to change. However, they can give an idea about the approved business activities for foreigners.
Process of Incorporation
It was speculated that the process of company incorporation or share transfer would change with the effect of this law. But, as per experts, no such change is applicable. The existing procedures will remain in effect for fully owned companies as well. Furthermore, there will be no additional capital, guarantees or fee required.
100% Owned Foreign Companies in Dubai
Currently, 59 investors have benefitted from this development in Dubai so far. As per Dubai Economy, there are over 1000 industries and commercial activities available for 100% foreign ownership. Entrepreneurs also do not need an Emirati agent to open a new branch of their foreign company.
Investors can start the procedure to set up a new venture in Dubai through a digital platform titled “Invest in Dubai”. It is designed to offer convenience to entrepreneurs as they can get the licensing procedure completed in a matter of few minutes. Moreover, there’s no requirement to visit a service centre. Apart from obtaining the licence, “Invest in Dubai” can also be used to reserve trade name and get initial approvals.
Those interested can choose from a range of activities, including contracting, general trade, gold, pearls, jewellery, foods, luxury watches, etc. Those who want to venture into the industrial category can explore metal and construction, water production, paint sector, building materials, flooring, and other such industries.
The status of business licenses already given remains unchanged. This means that the new development will not impact companies that already have an Emirati “partner”. However, there is a possibility of their withdrawal or reduction of share following legal procedures, according to Dubai Economy.
It is important to note that the legal form of an LLC enterprise to a sole proprietorship cannot be changed. However, there’s a possibility of transferring the license to a one-person company, albeit with limited liability.
Impact of This Development on the UAE Economy
This historic decision, as stated above, can greatly boost the country’s economy. As the major hindrance (getting a local sponsor) is no longer there, foreign investors are expected to show more keenness for starting a business here. Furthermore, this development is also expected to cement the country’s position as a global business hub.