100% Foreign Ownership in Mainland Dubai and UAE: A Quick View

Do you plan to set up business in Dubai? But due to ownership concerns, you must have a double-minded approach to this decision. Now, it’s nothing to be worried about. What if we told you it is now possible to have 100% foreign ownership in mainland Dubai and UAE? Yes, you heard that right!

Isn’t that great news?

Under certain conditions, the UAE government has allowed 100% foreign ownership of businesses located on the mainland. This rule was released on the 1st of June 2021. An important objective of this announcement is to encourage more business activity in the UAE and draw more foreign investment. Dubai’s economy has taken a huge hit, making this measure extremely important.

Start Your Company in Dubai!

Starting a mainland company in Dubai could not be more ideal than now. Mainland Licenses have become increasingly popular among start-ups and investors throughout the region because of the UAE government’s flexible licensing procedures, quick approval processes, and short timelines. 

FDI laws allow ex-pats to own 100% foreign ownership in mainland Dubai and UAE with no local sponsor required, meaning they can now launch their company without a local sponsor. It is not necessary to have an office space to get a company registered in Dubai, and Dubai Business Service can help you get started. 

An individual who holds a DED license is able to do business across the UAE with ease and work with government entities. Our concierge team at Dubai Business Service will simplify an otherwise complicated process.

Now, let’s dig deeper to find out more;

Legislative Amendments

A limited liability company operating as an onshore UAE business is prohibited from owning more than 49 percent of its stock from foreign shareholders under the Commercial Companies Law, Law No. 2 of 2015. A local sponsor must hold the remaining 51 percent share as an Emirati individual or company.

For certain categories of foreign firms, local service agents (Emiratis) were required to act as agents. These agents did not have shares but received a fee as part of the business setup process.

Natural individuals and legal entities, regardless of their national origin, are allowed to establish and own their own companies. Certain companies, however, will not be affected by the law because they are excluded based on Cabinet decisions or because they are owned wholly or partially by municipalities or federal governments.

Points To Be Noted According to New Foreign Ownership Law

In some cases, the terms of the new law have been a source of confusion. It is important that the Dubai Economic Department (DED) issues guidelines and orders so that the new law can be implemented in a smooth manner.

Here are some keynotes and actions to take:

  • The Invest in Dubai platform allows investors to complete their requirements via DED services or digitally.
  • Existing licenses held by businesses in Dubai will remain the same, including an Emirati partner under the MoA.
  • Emirati shares may be reduced or completely withdrawn according to legal procedures.
  • There will be no changes to followed procedures and requirements once full ownership is acquired.
  • For full foreign ownership of a property in Dubai, there are also no extra fees, capital or guarantees required. 
  • Turning an LLC into a sole proprietorship is not possible. However, the existing license can be transferred to a limited liability company for one person, based on the new existing laws.
  • Commercial agencies are not subject to the complete ownership requirement, as they are governed by the Commercial Agencies Law.

Are you Ready to Take Advantage of This Rule?

Our team can help you! We at Dubai Business Services can assist you with company formation in Dubai with 100% foreign ownership on the Dubai mainland or in changing UAE national ownership by amending the license, regardless of whether you want to set up a business in Dubai or already own one on the UAE mainland or in the free zone.

9 Best essential points about foreign ownership in the UAE

Listed below are a few essential points about foreign ownership in the UAE that can guide you on your way to owning your own business in the UAE.

1.      How do foreign nationals get 100% foreign ownership in mainland Dubai and UAE LLC companies?

Business setup consultants can help foreign nationals who own LLC companies in UAE to remove UAE nationals from these companies. Follow the steps below to take:

  • Create the license amendment application.
  • Amend the Memorandum of Agreement
  • Get preapproval from Economy Development Department
  • Fill out the application and submit it to DED
  • Pay your fees.

2.      Register a company in Dubai by a foreigner

Dubai is a great place for foreign entrepreneurs to launch a business. More than 80% of the local population are expatriates, and many of them run their own businesses. In the future, they will be able to control their business completely once the 100% foreign ownership in mainland Dubai and UAE law is in place.

3. What businesses are covered by 100% foreign ownership in Mainland Dubai and UAE?

Commercial companies with industrial activity are 100% owned by UAE companies with commercial activities.

4.      Need a sponsor to start a business

In accordance with the new laws in Dubai Mainland, it is not required to have a sponsor. Foreign nationals looking to provide consulting or services will, however, be represented by a local UAE national and not the 51% shareholder of the company.

5.      Start a company in the UAE

Follow these 6 simple steps to start your own company in the UAE:

  • Pick the business activity you are involved with
  • Choose the name of your company
  • Your incorporation paperwork must be completed
  • Get notified when your license is ready
  • Create an account for your company in a bank
  • You can get your visa processed if you’re a foreign national

6.      How much does it cost to register a company in Dubai?

Depending on the type of business and the location of the company, the cost of business setup in Dubai may differ. For the Service/Professional license, the minimum cost will be AED 8000/-, and for the Commercial license, it will be AED 14,000.

Additional fees will be charged by local sponsorship agencies in the UAE for professional licenses, professional setup consultancy fees, office rent, and visa fees. According to the new commercial companies law, amending the license and removing the local partner will cost around AED 5,000/- plus professional service fees.

(These are all approximated figures.)

7.      Residence in Dubai permanently

 A residency visa issued in the UAE is valid for three years. If the company remains active, it can be renewed for another three years. Foreign nationals with a net worth over AED 10 million will get a visa for ten years that can be renewed for another ten years at the time of expiration.

8.      Taxed according to income 

Profits and income are not taxed in the UAE, and one may contact their local tax advisor for assistance. In addition to issuing tax residency certificates, the UAE government avoids double taxation for foreign nationals so they can benefit from that too.

9.      Trading company with 100% ownership

Dubai offers foreign nationals the opportunity to acquire 100% foreign ownership in mainland Dubai and UAE for their businesses when it comes to some trading activities and a majority of manufacturing activities, except for some strategic sectors like insurance, defense, and civil aviation. A UAE national is no longer needed in Dubai Mainland when registering a company under the amended commercial companies law.

Beneficiaries of 100% foreign ownership

Over 1,000 activities in Abu Dhabi and Dubai have recently been released that are open to 100% ownership by foreign investors. You will no longer need 51% of the shares in your company to be owned by an Emirati if you own or want to incorporate a company that engages in these activities.

The categories of business activity differ between the two Emirates, but those listed include:

  • Creating contracts
  • Transport
  • Hotel services
  • Producing and manufacturing
  • Repairs and maintenance (exclusive to Abu Dhabi)
  • Hospitals (only in Abu Dhabi)
  • Trade and Investment (Dubai only).

Many sectors are covered by the authorities’ lists, however certain industries (including finance, banking, insurance) are still required to have at least a portion of their shares held by Emirati partners in the two largest emirates.

Impact on future foreign investment in Dubai & UAE

As a result of the new legislation, UAE’s investment ecosystem expands, increasing foreign investment potential in areas like investment, technology, finance, and construction. Corporate and entrepreneur investments will inevitably be attracted to UAE because of fewer restrictions and greater ownership options.

Among all countries globally, only five have achieved a higher ranking in an index measuring investor confidence, as the UAE jumped four places to rank fifth in 2021. A greater level of investor confidence in the UAE market is due to the new CCL amendments, as well as new compliance measures, such as ultimate beneficial owner and economic substance legislation. Emirati businesses and foreign investors can both benefit from this development.

Final Verdict

Having 100% foreign ownership in mainland Dubai and UAE will make a huge difference to UAE business growth, especially for investors who were unable to invest in the UAE mainland before.

The new amendments to the commercial company’s law will allow all currently licensed and previously licensed businesses in the UAE to amend their status. A major change in UAE law No.2 of 2015 regarding Federal Commercial Companies will take place in December 2020, rewriting the rules applicable to foreign ownership of commercial companies.

In order to assess the impact of the amended CCL on a client’s business, Dubai Business Service would be happy to help them review and review their current ownership arrangements and governance arrangements and also discuss investment opportunities with them.

Don’t Miss:

Contact Dubai Business Service if you have any questions, thoughts, or comments regarding this update.

Call Now For Free Consultation: +97145667485 or +971551129344

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