With recent changes in UAE business laws, foreign investors now have a golden opportunity to expand their ventures. The UAE has implemented amendments to its Commercial Companies Law, allowing for 100% foreign ownership across several sectors, without the need for a local Emirati sponsor, a policy that previously capped foreign ownership at 49%.
What Does 100% Foreign Ownership Mean?
Foreign investors can now fully own and operate businesses in the UAE in cooperation with a Local Service Agent (LSA), unlike the previous requirement where 51% of ownership had to be held by an Emirati sponsor. This move eliminates many barriers for international entrepreneurs looking to establish or expand their operations.
Eligibility for 100% Foreign Ownership
- Dubai: The Department of Economic Development (DED) has released a list allowing 100% ownership for 1061 of the total 2300 economic activities. These include trading, manufacturing, and professional services.
- Abu Dhabi: Investors in most trading activities still need an Emirati sponsor, with the 51-49 shareholding rule remaining in place.
- Other Emirates: Each emirate may implement these laws differently, but Dubai and Abu Dhabi have already made significant strides in applying the new regulations.
Sectors Eligible for 100% Foreign Ownership in Dubai
- Trading: Buying and selling goods and services.
- Manufacturing: Producing goods.
- Information and Communication Technology (ICT): Software development, IT services.
- Professional Services: Accounting, legal advice, consulting.
- Tourism and Hospitality: Hotels, restaurants, tour services.
However, industries like banking and finance, defense, and civil aviation are still restricted and do not offer 100% foreign ownership.
Opening a Franchise in the UAE
Franchising in the UAE is another lucrative option for investors, with the sector generating over $30 billion annually. International and local franchises are booming in industries like food, retail, automotive, and services.
Steps to Open a Franchise in the UAE
- Market Research: Conduct a thorough analysis of the target market, competition, and consumer preferences.
- Choose the Right Franchise: Evaluate single-unit and multi-unit franchise options based on profitability, business model, and brand reputation.
- Develop a Business Plan: Include key elements such as an executive summary, market analysis, marketing strategy, and a financial plan.
- Secure Financing: Explore investment options and assess initial setup costs, which could include franchise fees and working capital.
Business Location – Free Zone vs Mainland:
- Free Zone Benefits: 100% foreign ownership, tax exemptions, and easier registration but limited business scope.
- Mainland Benefits: Broader market access and no activity restrictions, but a local sponsor might be required.
- Register Your Business: Obtain a trade license and submit necessary documentation to the Department of Economic Development (DED) or the respective Free Zone authority.
- Visa Application: Apply for an Investor Visa for yourself and employment visas for staff.
- Franchise Agreement: Draft a robust legal agreement, covering franchise fees, quality control, site selection, and dispute resolution.
The UAE’s shift toward 100% foreign ownership opens up new possibilities for global entrepreneurs looking to establish or expand their businesses in the region. With a wide range of sectors now permitting full foreign control, and a business-friendly environment that includes tax advantages and simplified regulatory processes, the UAE has solidified its status as a top destination for international investment. Whether you’re looking to start a new venture or open a franchise, understanding the legal framework and making informed decisions about your business setup is crucial.
If you need expert guidance navigating the business landscape in the UAE, Raes Associates is here to assist. With extensive experience in company formation, licensing, and compliance, we help businesses thrive in the UAE’s dynamic market. Contact Raes Associates today to ensure your venture is set up for success.
