No more local shareholding in Joyalukkas, Malabar Gold & Diamonds in UAE
DUBAI: The leading jewellery groups Joyalukkas and Malabar Gold & Diamonds (MGD) have become free from local shareholding after UAE’s new foreign direct investment (FDI) law permitted 100 per cent foreign ownership in selected business sectors.
Several other business groups including Aster DM Healthcare, Mars, Pure Gold Jewellers, etc. have also converted their legal ownership by doing away with local shareholding during the past couple of months under the provisions of the new FDI law that was enacted last year.
Many others are said to be in the process of freeing their businesses from local shareholding after the much-awaited announcement of the new law last year.
The earlier FDI law in the UAE required the companies established in the country to have majority ownership to be vested with locals (Emiratis) as a precondition to get licence.
In the earlier regime, the foreign investors would enter into outside agreements with the local ‘majority shareholders’ detailing the ‘original ownership’ structure, though that wouldn’t have any legal standing.
This complex scenario had been explained in detail as part of the Risk Factors in the prospectus for Aster DM Healthcare IPO more than two years ago.
“Basically, these shareholding arrangements were built on sheer trust and this has worked through decades very well without disrupting the business or the relations with local majority shareholders,” said a chartered accountant who has helped prepare several such structures.
Talking to businessbenchmark.news over phone, Joy Alukkas, the eponymous chairman of the group, said UAE is the third GCC country, where the group is now set to operate without local shareholding, the other two being Bahrain (in 1999) and Saudi.’
“We are now working towards bringing Oman operations too in line with the law that allows 100 per cent foreign ownership. In the case of Kuwait and Qatar, we have to wait for the similar FDI laws to be in place,” Alukkas said.
Malabar Gold & Diamonds, another leading Jewellery group in the GCC, has concluded the legal conversion of its UAE operations into 100 per cent ownership about three months ago. Shamlal Ahamed, managing director, international operations, Malabar Gold & Diamonds, also confirmed that the group has completed the ownership conversion also in Saudi Arabia, Oman and Bahrain, wherenow Malabar Gold promoters own 100 per cent.
Though the FDI law has been amended to allow 100 per cent foreign ownership in certain sectors in the UAE, it’s not automatic or approved straight on an application. The authorities assess the standing of the business group in terms contribution to the local economy, employment generation, future plans, etc. before the permission to own 100 per cent foreign ownership is granted.
Both Joyalukkas and Malabar Gold & Diamonds have announced ambitious plans for expansion in the coming years. Apart from the GCC operations, Joyalukkas has branches in US, UK, Singapore and Malaysia as part of international operations.