Out-Law Legal Update | 05 May 2020 | 10:19 am | 2 min. read
The Cabinet of the United Arab Emirates (UAE) has confirmed which kinds of business activities may be 100% foreign owned, approving a list of 122 activities
The Foreign Direct Investment Law (Federal Decree Law No.19 of 2018) provided a framework for opening up markets to foreign investment. However, the market has been eagerly awaiting the areas of business activity in which up to 100% foreign ownership may be permitted, otherwise known as the 'positive list'.
The aim of the Foreign Direct Investment Law is to encourage more foreign investment into the country and improve economic growth.
The Foreign Direct Investment Law classifies business activities into three categories:
Until now the positive list had not been approved, so it was unclear whether applications for business activities in the positive list would have been approved for 100% ownership. The positive list includes:
However, there are various conditions:
The guidance issued by the Foreign Trade Sector, Investment Department also provides a mechanism for converting existing limited liability and private joint stock companies into foreign direct investment companies (FDI Companies). This will be welcomed by the thousands of foreign investors who have already have businesses in the UAE.
The guidance confirms that shares in FDI Companies can be transferred to new investors and the merger or acquisition of FDI Companies is also permitted.
The licensing authorities in Dubai have started to accept applications. It is expected that the licensing authorities in the other Emirates will follow suit soon. Licensing authorities will have responsibility for approving the applications and determining the percentages of foreign investment permitted in each case.
This is positive news for foreign investors but as implementation will be up to the licensing authorities in each individual Emirate it is important for foreign investors to obtain representation from local lawyers.
Additional reporting by Nathalia Elhage.
20 Nov 2019
02 Nov 2018