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UAE law paves way for 100% foreign ownership in some business sectors

The United Arab Emirates (UAE) is to take steps towards allowing 100% foreign ownership of companies in some onshore sectors in a major boost to foreign direct investment (FDI) in the country.

A decree on FDI was published in the country’s official gazette, although precise details of the new legislation are yet to be revealed.

However according to local news reports, the law will give licensed foreign investment companies the same treatment as domestic companies. Until now, there was a 49% limit on foreign ownership in UAE companies apart from those incorporated in an ‘offshore’ free trade zone.

UAE president Sheikh Khalifa bin Zayed Al Nahyan also announced that an FDI unit would be set up in the Ministry of the Economy. The unit will be responsible for proposing new policies related to FDI, establishing a database of investment data and existing FDI projects, and facilitate the licensing and registration of projects.

The new law is aimed at boosting the UAE’s attractiveness as a target for FDI and increase investment flows in priority sectors.

The FDI decree follows the UAE’s implementation of laws on bankruptcy and commercial companies in recent years.

The country also introduced a new arbitration law earlier this year, which is also designed to attract further FDI into the UAE. It provides an international framework, which is already familiar to the global business community, for the fair and efficient resolution of commercial disputes.

"This new law will be welcomed by foreign investors as it will undoubtedly enhance the competitiveness of the UAE," said corporate law expert Osama Hassan of Pinsent Masons, the law firm behind Out-Law.com. "Passing the new law at this time confirms the continued efforts of the government to increase the diversification of economic sectors and which are aimed at establishing UAE’s position as a regional and global leader in promoting and attracting foreign investments."

Corporate law expert Mohammad Tbaishat of Pinsent Masons said that the law would "boost economic growth and will help generate more business activity".

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