The Ministry of Economy announced on Wednesday that the previously announced Commercial Companies Law will come into effect from June 1st,2021 onwards. This will allow 100 percent foreign ownership of mainland companies in the UAE.
The new law will enable companies and entrepreneurs to apply for a business licence without the requirement of UAE nationals as the partner of the company. The earlier general rule was that all UAE mainland (i.e., those outside of free zones) mandatorily required 51% shareholding by UAE nationals when foreign nationals wanted to have a business setup in Dubai or UAE .
“The amended Commercial Companies Law aims at boosting the country’s competitive edge and is a part of UAE government efforts to facilitate doing business,” Minister of Economy Abdulla bin Touq Al Marri was quoted as saying.
The new amendments will boost the UAE’s appeal as an attractive destination for both foreign investors, entrepreneurs, and talent, and will further strengthen the country’s standing as an international economic centre and encourage an investment flow to vital economic sectors.
Key points in the new amendment
These key changes in shareholding patterns as per the new amendment are:
- Elimination of the requirement for the companies of UAE to have a majority of Emirati shareholders and Local agents during company registration in Dubai.
- Allows 100% foreign ownership of companies located on the UAE’s Mainland, i.e., onshore companies, subject to the policies outlined by the UAE cabinet in the form of a cabinet resolution.
- A joint-stock company is now allowed to sell 70% of its shares through an IPO. Previously, the percentage was as low as 30%.
- If the company works through its directors and general managers, undertakes an activity that causes the company to lose money, the shareholders have the right to sue the company in court.
- Gives local governments authority over the recognition of required capitalization, shareholding %ages, and approval for onshore company establishments that are subject to cabinet resolution policies. Previously, these powers were restricted to the Ministry of Economy or the Economic Departments of each Emirate.
- Meetings of companies are no longer required to be chaired by an Emirati; they are now open to Expatriates as well.
- Similarly, the prohibition on Expatriates serving on the company’s board of directors has been lifted.
- Because of the global pandemic, annual general meetings are now allowed for electronic voting as well.
- abuse of power by the executive officers or the chairs of the company, there is a provision to remove them.
Agriculture; manufacturing; transport and storage; hospitality and food services; information and communications; science and technology; healthcare; education; art and entertainment; and construction are some of the major categories that are included in the ‘positive’ list.
Is it possible for an existing LLC company in the UAE mainland can change their Local Agent?
The existing LLC company owner can amend their license by selling the shares of UAE nationals to foreign nationals and become 100% owner of the company.
Existing companies must ‘adjust their positions’ by January 2, 2022, according to the Amendment. This may necessitate amending LLCs’ Memorandums of Association to align quorum, notice, and meeting requirements with the Amendment.
A foreign national who is the existing owner of the LLC company in UAE Mainland would like to remove the UAE national from the LLC company in UAE, you can touch with Peninsula business setup consultants. visit our website or call us on +971 43887619