UAE Foreign Ownership Rules: Towards More Openness?


On November 7th, 2020, President Sheikh Khalifa of the United Arab Emirates (UAE) announced a revamping of the 2015 commercial companies’ law (the New Law), amending 51 articles and introducing three new ones. 

The changes made to the New Law are expected to attract more foreign investors and to improve the way business is conducted in the UAE.

What are the main amendments introduced to the New Law, and what is the outcome?


  • Foreign investors permitted 100% ownership 


One of the most important modifications to the New Law is that foreign nationals are now allowed to fully set up, own, and run a UAE mainland company without the need for an Emirati shareholder to hold the majority of the shares. 

By eliminating the local shareholding requirement, the process of setting up an onshore company in the UAE will be more flexible and will cost less in overhead.

That alone is a significant boost to the UAE’s  economy and will attract more foreign capital to the country.

Besides, an onshore company can now be established without appointing a local company or UAE national as a registered agent. The provisions requiring an onshore company’s chair manager and most of the board of directors to be UAE nationals were also abolished. 

That being said, UAE companies can now be entirely operated by non-Emiratis shareholders and directors of all nationalities.

Nevertheless, local authorities still require a level of participation by Emiratis in companies operating under specific important sectors, including oil and gas exploration, utilities and transport, and state-owned entities. These industries still require that 51% of the company’s share capital be owned by a UAE national.


  • Additional Amendments


Other amendments to the New Law include:

  • the ability to remove the chair or senior executives of a company if found guilty of fraud or abuse of authority;
  • the capability of shareholders to directly sue a company in civil court over any failure of duty that results in damages; and
  • the authorization of electronic votes in annual general meetings.

To boost liquidity in local capital markets, the New Law authorizes companies wishing to go public to sell up to 70% of their shares through an Initial Public Offering, instead of the currently applicable limit of 30%.  


  • Effect of the New Law


Although most amendments are effective as of December 1st, 2020, changes related to foreign ownership exemption, agency, and boards of directors will be in effect six months after the publication of the New Law in the Official Gazette. 

Companies will have one year to comply with the New Law from the date articles become effective.

The New Law aims to provide “a conducive legislative environment” for investments, according to Sheikh Mohammed Bin Rashid, Prime Minister and Ruler of Dubai.

This bold move will open the door for investors of all nationalities to set up more companies in the UAE and position the UAE as the market leader of the Arab world. 

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