In this globalized economy, businesses in UAE are expanding their reach across borders. Businesses are in search of new opportunities and markets in UAE. Many countries have implemented policies that allow for foreign ownership of businesses. This policy in countries is 100% foreign ownership, which permits foreign investors to own. Moreover, it allows businesses without the requirement for local partners.
While the UAE has made significant progress in recent years to attract foreign investors. There are still challenges for the business due to the limitations of foreign ownership. Let’s discuss some of the challenges businesses can face:
Limited control and decision-making
Foreign investors are limited from holding full ownership of their businesses in the UAE. Business in UAE might have less control over their strategic planning and decision-making. Moreover, this limits their ability to adapt to local market conditions. Also, implement their global strategies.
Difficulty in attracting and retaining talent
Foreign companies may find it tough to attract and retain top talent. Moreover, this becomes a problem in key leadership positions. This happens due to the requirement for local sponsorship. Also, this can limit their ability to build a strong and diverse workplace capable of driving growth and innovation.
Increased complexities and costs
The process of establishing a business with local sponsorship can involve additional costs and complexities. This can limit foreign investors from entering the UAE market, especially small businesses with limited resources.
Potential for conflicts of interest
When foreign investors have a minority stake in a UAE company. There is a risk of conflict of interest between the foreign partners and local sponsors. This can lead to disagreements over decision-making, profit distribution, and resource allocations.
100% foreign ownership in UAE for LLC companies
UAE has allowed 100% foreign ownership in Dubai, Mainland on LLC companies. In November 2020, a Presidential Decree was issued announcing major changes to the foreign ownership rule in the UAE Commercial Companies Law 2015. This happened to attract more foreign investors to start their business in UAE.
The general rule was that all mainland UAE require 51% shareholding by UAE nationals. Whenever any foreign entrepreneurs wanted to have a business setup in Dubai. They had to have 51% shareholders of UAE nationals. It is possible to have a change in the economic interests of both foreign and local shareholders. So, the decision to make 100% foreign ownership in the UAE is beneficial.
The Foreign Direct Investment Law permitted foreign investors to have 100% foreign ownership in UAE.
Key points in the 100% foreign amendment
Let’s look for the key changes in the foreign shareholding patterns according to the latest amendments.
It eliminates the need for UAE companies to have a majority of Emirati shareholders and Local agents during company registration in Dubai.
This amendment allows 100% foreign ownership for investors in UAE on companies located in the mainland area.
A joint stock company can sell 70% of its shares through an IPO. However, the percentage was as low as 30% previously.
If the company engages in such activity, that causes the company to lose money. Then, the shareholders have the right to sue the company in court.
Also, it gives the local governments authority over the shareholding percentages approval for onshore companies that are subject to cabinet resolution policies. Before, these powers were only given to the Ministry of Economy.
The meetings of the companies no longer require to be presided over by an Emirati. Also, they are open to expatriates.
Also, the prohibition on expatriates has been lifted by serving on the company board of directors.
Annual general meetings can also hold electronic voting as well.
There is a provision for removing executive officers or company chairs if they abuse their power.
A vision of economic dynamism
The UAE’s decision to embrace 100% foreign reflects its commitment to fostering a knowledge-based economy and dynamic. Moreover, the UAE has positioned itself as an attractive hub for multinational corporations and entrepreneurs. This policy has the potential to:
Stimulate economic growth
However, increased investment will drive economic expansion. Also, it will create employment opportunities and boost local businesses.
Complete control and flexibility
foreign investors gain complete ownership and control over their businesses. It enables the business in UAE to grow with proper strategic decisions. The complete control over business in UAE can open many doors to the local market.
Easy entry and operations
The streamlined process of establishing a business in UAE without local sponsorship reduces administrative burdens. The business setup in UAE becomes more attractive and easier to enter in UAE market.
Increased profitability for profit-sharing with local partners is not an issue anymore. The foreign investors can now have full control over their profit.
Strengthening international relations
Increased foreign investment can strengthen the UAE’s economic and diplomatic relations. This can lead to new collaborations and opportunities for growth.
Conclusion
All in all, 100% foreign ownership in UAE has emerged as a game changer for foreign business investors in UAE. Business in UAE can become complicated if there are multiple shareholders. The UAE is fostering a vibrant and dynamic business environment that benefits both local and international stakeholders.
ebs offers a good suite of business setup services in UAE. Business in UAE has become more competitive but easy to start. We will help you start your business in UAE. You can now open your company without any hurdles in UAE.
Our expertise will help you to avail yourself of 100% foreign ownership in Dubai, UAE. here are some of the services we offer in UAE:
- Company registration
- License acquisition
- Local sponsorship
- Office setup
- Taxation and accounting
Our services include accounting and bookkeeping services, Auditing, Due Diligence audit services, and many more. You can get in touch with our experts and contact us today.
FAQs
Can you own 100% of your business in Dubai?
Yes, you can have 100% foreign ownership in Dubai in the mainland area. As long as the business abides by the rules, they are eligible for this relief.
Can a foreigner own a business in UAE?
Yes, foreigners can legally establish businesses in the UAE, as a free zone company, mainland company, or offshore company.
What is complete foreign ownership (FO) in the UAE?
Complete foreign ownership in the UAE is a policy that allows foreign investors to own 100% of a company in the country. This policy is attracting a number of foreign investors in UAE.
What are the benefits of FO in the UAE?
There are many benefits to full ownership in the UAE such as:
Complete control over the business
Access to a wider range of talent
Ease of entry and operation
Increased profit potential