Establishing a company in Dubai
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Following the entry into force of the UAE Companies Law (wholly owned by Continental Bur Dubai) on June 1, foreign entrepreneurs no longer need a state partner to set up a company in the UAE. Economy Minister Abdullah bin Touk al-Mari said the UAE government's main objective in promoting business activities is to double the benefits of a competitive climate. Last year, the United Arab Emirates announced a law allowing foreign companies to take 100% corporate ownership. It is one of several measures aimed at attracting investment and foreigners hard hit by the coronavirus outbreak. Under a previous law first enacted in 2018, foreigners can already own up to 100 percent of "free zones".
Previously, the general rule for foreigners wishing to set up a company in the UAE was that 51% of the shares must be owned by a UAE national (or a company wholly owned by a UAE national). The UAE company law contains this requirement. While it is generally accepted that the economic power of international and local shareholders in corporate ownership and decision-making can be altered to some extent, many questions remain about the viability of these arrangements.
* Main provisions of the new law
According to the newly enacted law, the activities of investors and shareholders have undergone some of the following major changes:
For business registration in Dubai, UAE companies are no longer required to have a majority stake in the local shareholders and nominees in the UAE.
- In accordance with United Arab Emirates policy in the form of a decision of the Council of Ministers.
Foreign capital is allowed to own UAE-related business organizations, i.e. companies in the country.
- An initial public offering (IPO) allows a public company to sell 70% of its shares. Previously, this percentage did not exceed 30%.
- If the company, through one of its directors or shareholders, takes measures that result in a loss of sales, the owner of the company has the right to sue the listed company in court.
Under the Cabinet Order guidelines, local governments can recognize the required capitalization, ownership percentages and license's for businesses on land. Previously, these powers were limited to the Ministry of Economy or Commerce of each emirate.
- Chairing meetings is no longer the domain of Emiratis; it can be led by foreigners.
The ban on foreigners serving as board members was also lifted.
- Due to the global pandemic, the AGM will also be automatically voted.
The ability to remove a director or director from office for abuse of power.
Why does 100% ownership law apply to in-house companies in Dubai?
To increase its visibility among global buyers, entrepreneurs, start-ups and the best talent markets around the world, the UAE is striving to make business creation easier by removing existing barriers and opening up the economy, putting the country in a better position . Prepare for the next 50 years.
How does full ownership affect startups?
When it comes to flexibility when starting a business, new investors in the UAE market have a strategic advantage. Non-Emirates of all nationalities can now fully own their business under the new legislation as long as they work in one of the permitted industries.
How will real estate law affect existing businesses?
The registration of an existing limited company can be renewed by selling shares of UAE nationals to foreigners and making them the sole owner of the company.
Under this change, existing companies have until January 2, 2022 to "relocate". In order to align quorum, notice, and compliance specifications with changes, it may be necessary to revise the agreed terms of the local office.
* How TM can help you
At TM , we strive to articulate all standards and business needs so that we can provide professional and reliable advice on current laws and regulations, inform our clients of all their rights, and provide cost-effective solutions that fit their needs and budgets .
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