UAE: Amended companies law allowing 100% foreign ownership

Effective 1 June 2021, the amended companies law allows 100% foreign ownership

Effective 1 June 2021, the amended companies law allows 100% foreign ownership

An amendment to the Commercial Companies Law (CCL) allows 100% foreign ownership of UAE mainland companies, effective 1 June 2021.

The amended CCL repeals the required minimum UAE ownership percentage (51%) in UAE mainland companies. Accordingly, mainland UAE companies (existing and new) are allowed to be 100% foreign-owned—effective 1 June 2021—subject to obtaining specific approval from the relevant authorities in each emirate.

KPMG observation

Previously, foreign investors that sought to retain 100% legal and economic control in a UAE-based entity would opt to set up their entities in a free trade zone (FTZ). However, this often posed challenges, as entities set up in UAE FTZs are generally only permitted to carry out activities for which they are licensed—either within the FTZ where they are registered or outside the UAE (subject to the laws of the countries concerned). Under the amended CCL, foreign investors can now take advantage of setting up their wholly owned companies in the mainland, thereby possibly offering more flexibility in carrying out business operations.

Existing mainland companies with local or Emirati shareholding may want to consider exploring converting their companies to 100% foreign-owned entities, while managing their business ties with the local partner(s).

Read a June 2021 report prepared by the KPMG member firm in the United Arab Emirates

 

 

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