UAE: Expanded list of sectors, activities for foreign direct investment

UAE: Expanded list of sectors, activities

The UAE Cabinet approved a resolution—Cabinet Resolution No. 16 of 2020 (17 March 2020)—that expands the list of economic sectors and activities eligible for foreign direct investment.

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Cabinet Resolution No. 16 of 2020 clarifies that companies that operate under all economic sectors that appear on the “positive list” across three broad sectors—agriculture (19 activities), manufacturing (51 activities), and services (52 activities)—are eligible for full 100% foreign ownership in mainland UAE.


Background


Previously, foreign investors could hold only up to 49% of a mainland UAE company. Federal Decree-Law No.19 of 2018 (September 2018) provided a mechanism under which foreign shareholders could own up to 100% shares of a UAE mainland company and also stipulated the “negative list” of sectors, wherein full foreign ownership would not be permitted.

In July 2019, the UAE Council of Ministers approved a “positive list” of activities under which up to 100% foreign ownership was permitted in mainland UAE entities—provided that certain criteria were satisfied.


Expanded opportunities

Cabinet Resolution No. 16 of 2020 clarifies that companies under the economic sectors on the “positive list” are eligible for full 100% foreign ownership in mainland UAE. Further, the resolution sets out the requirements and conditions that companies must satisfy (apart from minimum capital requirements) such as conditions pertaining to investment in modern technologies, contributions to research and development, and employment numbers, as well as the need to obtain specific approvals and other requirements for certain licensed activities.

Cabinet Resolution No. 16 of 2020, therefore, may provide foreign investors with greater flexibility and more options to deal with the shareholding composition and ownership structure.

Read an April 2020 report prepared by the KPMG member firm in the UAE

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