In a bold step, the UAE declared on Wednesday that from June 1, 2021, investors and entrepreneurs will be able to own 100% of their enterprises.
In a tweet, Minister of Economy Abdullah bin Touq said that the recent decision is a new move that represents the UAE government's commitment to supporting the economy and improving its future preparation.
The UAE stated in November 2020 that the ground breaking legislation allowing foreign investors to acquire 100% of a company would take effect on December 1, 2020. However, after expanding the list of sectors eligible for full foreign ownership, the bill is currently set to take effect on June 1, 2021.
President His Highness Sheikh Khalifa bin Zayed Al Nahyan authorised the long-awaited and widely publicised reform last year, which will have game-changing ramifications for the nation's investment sector.
His Majesty Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the United Arab Emirates and Ruler of Dubai, has stated that the UAE now has a favourable regulatory framework for foreign direct investors, which will help the country compete more effectively.
Ten New Industries
The UAE Ministry of Economy announced last month that it is working on new legislation to add ten additional areas to the Commercial Enterprises Law, which enables 100% foreign ownership of onshore companies in the country.
Abdulla Al Saleh, Undersecretary of the UAE's Ministry of Economy for Foreign Trade and Industry, said this landmark legislation under the Commercial Companies Law is in its final stages of preparation, allowing investors and businesses in ten new vital sectors to come under the law's jurisdiction.
From December 1, many categories of business licences will no longer require Emiratis as sponsors with 51 percent shareholding rights under the new foreign direct investment framework.
Pursue a New Status
The deletion of the national service agent requirement took effect on April 1, according to Al Saleh, who also stated that all currently and previously licenced enterprises in the UAE can modify their statuses in accordance with the recent modifications to the commercial company law.
“Recently approved or soon to be implemented legislation aims to boost the country's competitiveness for both domestic and international investors, as well as improve corporate performance. These laws are not the result of a crisis, but rather of a clear vision of the country's economic future envisioned by federal, local, and private sector partners working together,” Al Saleh added.
On the back of a number of region-first changes, including the 100% business ownership law, saw a 44.2 percent increase in foreign direct investment (FDI) flow to Dh73 billion in 2020.
Artificial intelligence, the Internet of Things, blockchain, medical know-how, augmented and virtual reality (AR and VR), robotics, self-driving cars, renewable energy, innovation, and agritech, among other areas, received the majority of FDI flows in 2020. The oil and gas sector were the busiest in terms of recruiting FDIs, with Adnoc spearheading a number of significant investment and partnership projects.
Industry executives are optimistic
This is the largest master stroke I've seen in terms of giving 100% ownership for enterprises. As is well known, expats have been putting 100 percent of their earnings in their enterprises, but have had to write 51 percent of their investments in the names of our Emirati brethren in their business licences. The Sword of Damocles was always hanging over the investors' heads, and they could never bring in more money freely.
“This brilliant move will bring billions of dollars in FDI to the UAE. The announcement could not have come at a better time. Entrepreneurs are searching for investments in modern and safer countries like the UAE as the world prepares for Expo 2020 and the global economy recovers from the Covid pandemic. It offers world-class infrastructure and a high-quality living environment; the United Arab Emirates may be the top investment destination,” he remarked.
A Distinct Vision
“From June 1, 2021, this game-changing step of granting full ownership of enterprises to expatriates will increase investor confidence even more. The UAE government's dedication to supporting the country's economy and attracting greater international investment is reflected in this new initiative. It will help the UAE become more competitive in the eyes of both domestic and foreign investors.
A Positive Step
“Allowing foreign investors to own 100 percent of onshore enterprises represents a watershed moment in the UAE's extraordinary economic trajectory. He claims that switching to FDI “increases capital investment and ushers in a golden period of economic growth.”
“This is a positive step that will encourage restructuring and more effective capital reallocations, as well as reduce the UAE's reliance on oil and gas. This is also consistent with the highly successful In-Country Value initiative, which continues to promote socioeconomic development. Above all, in this year of Expo 2020, it will further boost the UAE's position as a dream centre of business, entrepreneurship, innovation, and technology.