UAE Federal Law No 2 of 2015 on Commercial Companies amended
The President of the UAE, HH Sheikh Khalifa bin Zayed Al Nahyan has issued a decree overhauling foreign ownership rules of commercial companies, as part of the government’s on-going efforts to ensure a conducive legislative environment and open up economy to all nationalities.
The decree, which has introduced significant amendments to the UAE Federal Law No 2 of 2015 on Commercial Companies, annuls the requirement for commercial companies to have a major Emirati shareholder or agent, to provide full foreign ownership of onshore companies.
Under the new amendments, businesses can now be established by non-Emiratis of all nationalities with full ownership, with companies now having a maximum of one year to comply with the amended law from the time its articles become effective.
This can be extended under a decision by the Cabinet as proposed by the Minister of Economy.
Decree supersedes FDI Law
The decree, in addition, supersedes the UAE Federal Law No. 19 of 2018 on Foreign Direct Investment (FDI Law). It also includes certain provisions and regulations related to limited liability and joint stock companies aimed at attracting foreign capital and further boosting the local economy.
The decree grants relevant local authorities a set of powers, including setting a specific percentage of Emiratis in the capital allocation and boards of directors of companies, approving requests to establish companies – except for joint stock companies- and identifying fees & charges according to the policies adopted by the UAE Cabinet.
Abdullah binTouq Al Marri, the UAE Minister of economy, said the new Decree is an additional step in a series of efforts that the UAE is taking to raise the readiness of the national economy and prepare for the future by developing commercial and investment opportunities and increasing the competitiveness of the business environment.
Significant changes include that the firms wishing to become joint stock companies can, after the approval of relevant authorities, sell up to 70 per cent of the company, instead of the current 30 per cent, through IPOs.
The decree authorises the Cabinet to set up a committee that includes representatives of the relevant authorities with a view to proposing activities of “strategic impact” and the measures required to license companies that operate in such areas.
Upon recommendation of the committee, the Cabinet will stipulate what activities shall be considered of strategic impact and the required measures for licensing such companies.