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The landmark reform was originally slated to roll out in December last year.
The UAE, a dramatic move, announced on Wednesday that it would allow investors and entrepreneurs full ownership of companies from June 1, 2021.
Minister of Economy Abdullah bin Touq in a tweet confirmed that the latest decision is a new step that reflects the UAE government’s commitment to supporting the economy and enhancing its readiness for the future.
In November 2020, the UAE announced that the landmark reform allowing foreign investors 100 per cent ownership of businesses would take effect from December 1, 2020. However, after widening the scope of sectors eligible for full ownership by foreign investors, the law is now ready for roll out from June 1, 2021.
The long-anticipated and widely discussed reform, which will have game-changing implications on the investment landscape of the nation, was approved by President His Highness Sheikh Khalifa bin Zayed Al Nahyan last year.
His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, has said the UAE now enjoys a fertile legislative environment for foreign direct investors in order to enhance the nation’s competitiveness.
10 new sectors
Last month, the UAE’s Ministry of Economy said it is working on a new legislation to include 10 new sectors to the Commercial Companies Law, which allows 100 per cent foreign ownership of onshore companies in the country.
While speaking at the Seventh edition of Sharjah Economic Ramadan Majlis, Abdulla Al Saleh, Undersecretary of the UAE’s Ministry of Economy for Foreign Trade and Industry, said this landmark legislation in the Commercial Companies Law is in its final stages of formation which will enable investors and business in 10 new sectors of strategic importance to come under the purview of the law.
As per the new foreign direct investment regime, several categories of business licences will no longer require Emiratis as sponsors with 51 per cent shareholding rights from December 1.
Go for new status
Al Saleh said the cancellation of the national service agent requirement came into force on April 1, and also affirmed that all current and previously licensed businesses in the UAE can amend their statuses according to the new amendments to the commercial companies’ law.
“Legislations that have been issued or those that will be enacted soon seek to increase the country’s competitiveness for both local and international investors, and advance business performance. These legislations are not the outcome of a crisis, but follow a clear vision of the country’s economic future envisioned collaboratively by federal, local, and private sector stakeholders,” Al Saleh said.
In 2020, recorded a 44.2 per cent surge in foreign direct investment (FDI) flow to Dh73 billion year-on-year on the back of a series of region-first reforms, including the 100 per cent business ownership law.
FDI flows during 2020 were mostly into digital economy, including Artificial Intelligence, Internet of Things, blockchain, medical knowhow, augmented and virtual reality (AR and VR), robotics, self-drive automobiles, renewable energy, innovation, and agritech, among others. The oil and gas sector was the busiest in attracting FDIs with Adnoc spearheading a number of big investment deals and partnerships.
Industry executive upbeat
Paras Shahdadpuri, chairman, Nikai Group of Companies, appreciated the latest initiative to grant 100 per cent ownership of companies from next month.
“This is the biggest master stoke I have seen in my three decades of business in the UAE of allowing 100 per cent ownership for the businesses. As is widely known, expatriates have been investing 100 per cent amounts in their businesses but have had to write in their licence 51 per cent investments in the name of our Emirati brothers. The investors always felt the threat of the Sword of Damocles and could never bring in more investment freely,” he said.
“Being the former Chairman of Indian Business Council and other economic fora, we have been talking with various top UAE authorities for about 15 years and I am personally extraordinarily happy that my representations have ultimately borne fruit.
“This master stroke will fetch billions of US dollars of FDI into UAE. The timing of the announcement could not have been more apt. With the upcoming Expo 2020 and with the global economy recovering after Covid pandemic, the entrepreneurs are looking for investments in progressive and safer countries like UAE. It has world class infrastructure and high-quality living environment; UAE can be the No. 1 destination for the investments,” he said.
A clear vision
Kamal Vachani, group director of Al Maya Group, said this is another landmark decision by the wise leadership of the UAE and their clear vision to support the country’s economic future.
“This game-changing step of full ownership of companies to expatriates from June 1, 2021, will further boost investors’ confidence. This new initiative reflects the UAE government’s commitment to support the country’s economy and attract more foreign investment into the country. It will help increase the UAE’s competitiveness for both local and international investors,” he said.
A welcome move
Mayur Batra, founder and CEO, MBG Corporate Services, said this is a welcome move and will help attract more investment in the UAE.
“Allowing foreign investors 100 per cent ownership in onshore companies is a momentous leap forward in the UAE’s remarkable economic journey. Flip to FDI increases capital investment and ushers in a golden era of economic growth,” he said.
“It is a welcome move that will also stimulate restructuring activities and more efficient capital reallocations, and also reduce UAE’s dependence on Oil and Gas. This is also in line with the hugely successful In-Country Value programme which continues to foster socio-economic growth. Above all, it will further enhance the UAE’s reputation as a dream hub of business, entrepreneurship, innovation and technology in this year of Expo 2020,” he added.