Foreign ownership changes not expected in new UAE companies law

20 February 2014

A change to the 51 per cent local ownership law in the UAE had been widely expected

The new UAE Commercial Companies Law is not expected to include a change to the requirement that companies in the country are majority owned by locals.

“The 49:51 ownership structure has not changed in the latest draft of the law,” says Husam Hourani, managing partner of local law firm Al-Tamimi & Co.

The law, which is expected to be passed this year, had been expected to include a change to the foreign ownership regulations, but after much debate by the government it was decided that there are sufficient foreign ownership options in the UAE’s many free zones, and the existing law should remain. Regulations governing free zones will be included in the new law.

There will be some degree of flexibility introduced in the new law. It will include a clause that will allow the government to waive the regulations for companies that would offer a clear benefit to the UAE’s economy. “There will be a clause to allow cabinet to provide waivers for areas where they need support and investment from foreigners, such as healthcare, technology and education,” says Hourani.

Another change to the new law will allow sole ownership of companies. This move that should encourage more small and medium enterprises (SMEs), although more support for small businesses is needed, especially for expatriates.

“It is unfair for SMEs, we do not have enough support,” says Hourani. “Government support is there for locals, but not for expatriates. Bank loans to SMEs charge interest of 12-15 per cent. There are a few [investment] funds, but there are not enough. We need more to encourage and give incentives for starting a business.”

Al-Tamimi has produced a guide, Doing Business in Dubai, in conjunction with local hotel operator Jumeirah Group to promote commerce in the emirate.

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