In June 2021, the UAE government made some significant amendments to the Commercial Companies Law (CCL) marking a momentous milestone for its business landscape. These changes ushered a new era for the entrepreneurial community by granting them 100% foreign ownership UAE of their business. In simple words, foreign entrepreneurs are now allowed to enjoy full ownership and control over their businesses in the UAE.
This latest regulation is believed to be an innovative move towards establishing the country as the premier global business hub. Through this brief article, we will explore the recent changes in the UAE Companies Law and their impact on entrepreneurs and the UAE economy.
100% foreign ownership UAE: New Regulation v/s Old Regulation
As per the updated regulations, a Limited Liability Company in Dubai can now be fully owned by its owners, be it a single individual or with multiple shareholders.
Previously, foreign business owners were restricted to owning only 49% of their company, while the remaining 51% were held by a UAE national or an Emirati sponsor. Only selected activities in the professional services sectors and specific free zones were exempted from this rule.
However, the new law removed the obligation of finding Emirati sponsors, thus enabling both individual entrepreneurs and corporations to establish companies in the UAE mainland without the necessity of a local partner. This means that the expatriates can now benefit from 100% foreign ownership UAE by collaborating with a local service agent (LSA) who will assist the expat owner with all paperwork and licensing procedures without holding any rights in the company. In short, the decision-making power stays solely in the hands of the expatriate business owner.
Revision of laws of 100% foreign ownership UAE
There were several key objectives to drove the revision of laws to allow 100% ownership of businesses:-
- Develop a productive judicial environment beneficial for company establishments.
- Improve the efficiency of conducting business within the country.
- Planning for the future by encouraging foreign investment and commercial opportunities.
- Boost the effectiveness of the business environment to align with the economic changes and global developments.
- Fulfill the growing concerns and needs of the business community.
- Boost the appeal of the nations to foreign investors, businesses, and startups considerably.
- Empower foreign investors by providing them with complete control over their businesses, operational and legal, and free from unwanted intervention.
- Attract business aspirants worldwide to establish their businesses in the UAE and enjoy full ownership.
Benefits of 100% foreign ownership UAE
There are numerous advantages of having complete foreign ownership in the UAE.
- Complete control – The expat business owners can have complete control over their company operations without sharing the partnership with anyone else.
- Ease of operations – With foreign ownership, expats can find ease in conducting trade operations in the UAE.
- 100% profit repatriation – Since foreign owners can have full control over their business, they are also entitled to get a full return on profits.
- Tax benefits – Foreign entrepreneurs doing business in the UAE get to enjoy the tax exemptions offered by the government.
- Strategic location – One of the major attractions of the UAE that draws foreign entrepreneurs to the country is its prime location.
- Business-pro environment – The atmosphere of the UAE is business-friendly which helps businesses prosper and expand to global markets.
Key steps to establish a business with 100% foreign ownership UAE
This segment will cover the basic steps that you need to follow for a successful business setup in Dubai:
Choose a business activity and legal structure
Begin with identifying the nature of the business activity that you want to engage in. This will help you determine the type of license you will need to operate your company in the UAE. For example, professional, industrial, occupational, agricultural, commercial, etc. Next, decide on the legal form or structure of the company based on your business nature and requirements.
In the UAE Mainland, the available options are sole establishment, civil company, limited liability company, holding company, public/private joint stock company, branch of a local company/ GCC company, and representative office of a foreign company. On the other hand, free zones have Free Zone Company, Free Zone Establishment, and Free Zone Limited Liability Company as legal structures.
Select an appropriate location
The choice of location affects many things in the process of foreign business setup in Dubai, UAE. Starting with the free zones, which happens to be a common preference among foreign entrepreneurs and investors. There are more than 40 active free zones in the country that sanction 100% foreign ownership, along with the liberty to purchase properties, rent and own offices, or even get a virtual office registered. In addition, foreign business owners can enjoy tax exemptions, corporate facilities, and an extended global reach in free zones.
Compared to Free Zones, the Mainland is more flexible in terms of operations. The company owners have the freedom to conduct commercial activities with anyone without any restrictions.
Register a business name
Now that you selected a location for your foreign company, it’s time to register a trade name with the Department of Economic Development. However, there are certain terms and conditions rolled out by the authorities for picking a trade name. For instance, the company’s legal structure should be added in the suffix. The name must not contain any inappropriate and offensive terms. It should not resemble the names of government agencies and rules either. Most importantly, it should be unique and approved by the authorities.
Get initial approval
You will need preliminary approval from the authorities to establish your foreign ownership business in the UAE. Submit the necessary documents including a complete application, business plan, Letter of Intent, copies of passports of shareholders and managers, RIC form for appointed managers, and financial audit reports. This particular step will help you proceed with the company registration process.
Draft the company’s MOA
The MOA (Memorandum of Association) is an essential corporate document that outlines the details of the company and the associated partners such as its vision, goals, strategies, and other details. Hence, it needs to be well-drafted and attested by the relevant officials.
Obtain necessary licenses and permits
Moving further, you will require certain approval and permits from the relevant government authorities. For instance, the Ministry of Justice will approve legal activities, the Ministry of Economy for insurance activities, the Local Municipal Department for agricultural and engineering matters, the Ministry of Interior for general transport, and TDRA for activities concerning telecommunication.
Register the business
Finally, get your company registered with the relevant authorities. For Mainland business setup, you need to approach the DED, whereas for free zones, you can reach out to the respective free zone authorities. Submit your registration application along with some supporting documents such as Articles of Association, notarized and attested specimen signature of the manager, board resolution, and power of attorney given to the director.
Once your business is successfully registered and you have your business license in hand, you can confidently proceed with your visa applications and a corporate bank account opening. The business setup consultants of Shuraa will make your whole incorporation process smooth and offer free consultancy so that you don’t run into any pitfalls.
Business setup in the UAE with Shuraa
Connect with the company formation specialists of Shuraa Business Setup and schedule a free consultation regarding the regulatory changes in the UAE Companies Law. Send your queries to info@shuraa.com
