New ownership law will encourage entrepreneurs to start new ventures
The new law will open the economy to global businesses and investors in an unprecedented way.
Inayat-ur-Rahman, Deputy Business Editor
President His Highness Sheikh Khalifa Bin Zayed Al Nahyan has issued a decree overhauling foreign ownership rules of commercial companies.
The first of a kind in the GCC region, the 100% ownership of the business in the UAE will boost FDI, investment flows, recoup the economy affected by the COVID-19. The bold step will also greatly encourage entrepreneurs to start new ventures and expand locally, regionally and globally.
By revamping the foreign-ownership laws, the UAE has taken a giant leap towards economic diversification. Kudos to the UAE leadership for this monumental decision . This is indeed the most pragmatic way to develop the country organically and inorganically, and broadcast the image of openness, ease and flexibility to the investor world. This move will elevate UAE’s position in the Ease-of-Doing-Business index by several notches. The decision will undoubtedly attract and welcome new and large investment in the country.
This move will make the UAE an even more attractive investment destination and commercial hub for international entrepreneurs and investors. It will also result in increased accountability and focus on business growth, rather than a diversion of energies towards internal stakeholder management.
Mohamed Juma Al Musharrkh, CEO of the Sharjah FDI Office (Invest in Sharjah) told Gulf Today that the issuance of the new decree to revamp the UAE Federal Law No. 2 of 2015 on Commercial Companies, which now allows foreign nationals 100% ownership of their onshore companies in the UAE, thereby invalidating the law’s earlier requirement of a major Emirati shareholder in these companies is a strong sign of a forward-thinking leadership.
Noting that the decree was aligned with the latest global FDI trends, he said it opened the local economy to global businesses and investors in an unprecedented way, and will offer a major boost to attracting foreign capital into the UAE economy amid the challenges posed by the coronavirus (COVID-19) crisis.
Al Musharrkh mentioned that the UAE has always been proactive in leading the narrative of economic competitiveness on the global stage.
“This step attests to our confidence in driving further growth in local markets built on the foundations of diversification and stability. Needless to say that the UAE’s resilient legislative ecosystem has played a vital role in offer the local economy the flexibility it requires to navigate novel circumstances, uncertainties and rise above challenges to boost national growth,” he said.
“On the horizon now are opportunities for exciting new partnerships and ventures that will help strengthen the UAE’s relations with investors of all nationalities; we look forward to seeing the positive impact of the new decree on Sharjah’s economy and its diversification efforts. The announcement falls in line with our mission to attract qualitative new investments to the emirate, and at IIS we look forward to being key advisories and consultants to companies aspiring to bring their businesses to Sharjah. I expect this landmark decree to have a lasting impact on the UAE’s FDI inflows,” Musharrkh concluded.
Under the new amendments to the UAE Federal Law No. 2 of 2015 on Commercial Companies, businesses can now be fully established by non-Emiratis of all nationalities, 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. The decree supersedes the UAE Federal Law No. 19 of 2018 on Foreign Direct Investment (FDI Law).
Dr Azad Moopen, Founder Chairman & Managing Director, Aster DM Healthcare, said: “We congratulate the visionary Rulers of UAE on their remarkable move to allow foreign investors to hold 100% ownership of commercial companies, allowing the country to boost its competitive advantage in several sectors.
“The law has allowed us at Aster DM Healthcare to take over 100% legal ownership of our hospitals, clinics and consulting business in Dubai while the process is ongoing for our business in other sectors.”
“The development provides significant impetus to long-term players like us to strengthen our commitment to the market and also attract foreign companies to think of long-term investments in UAE, turning the country into a strategic hub for development in the region, ” Moopen concluded.
The UAE has become a hub for investment, where most of the organisations are taking advantages of business opportunities to the fullest. These timely decisions make the country a desired destination for starting and growing business in the local and global markets.
