UAE Economic Reform: Full Foreign Ownership Allowed
Federal Decree-Law No. XX of 2024
The landmark Federal Decree-Law No. XX of 2024 represents a significant milestone in the UAE’s economic reform agenda. Under this decree-law, foreign investors are granted the right to establish and wholly own companies in specific sectors, thereby eliminating the requirement for a local Emirati sponsor or partner.
Sectors Eligible for Full Foreign Ownership
While the decree-law paves the way for full foreign ownership, it is important to note that certain sectors remain restricted or subject to specific conditions. Sectors eligible for full foreign ownership are typically those deemed strategic or of national interest, including but not limited to:
Information Technology
Manufacturing
Renewable Energy
Education
Healthcare
Hospitality and Tourism
Agriculture
Logistics and Transportation
Requirements for Foreign Investors and Entrepreneurs in the UAE
Foreign Investors and Entrepreneurs
Foreign investors and entrepreneurs seeking to establish a presence in the UAE can benefit from the new regulations allowing for full foreign ownership. To qualify, investors must meet certain eligibility criteria, including:
Demonstrated financial solvency and viability of the proposed business venture.
Compliance with sector-specific regulations and licensing requirements.
Submission of a comprehensive business plan outlining the objectives, operations, and projected financials of the proposed company.
Benefits of Full Foreign Ownership
Enhanced Control and Decision-Making
One of the primary benefits of full foreign ownership is the ability for investors to retain complete control and decision-making authority over their businesses. Without the requirement for a local sponsor or partner, foreign investors have the autonomy to steer their companies in accordance with their strategic vision and objectives.
Increased Investment Flexibility
Full foreign ownership opens up opportunities for investors to explore new markets, expand their operations, and diversify their investment portfolios. With greater flexibility and autonomy, investors can make informed decisions based on market dynamics, growth potential, and regulatory considerations.
Facilitated Market Entry and Expansion
The elimination of the local sponsorship requirement streamlines the process of market entry and expansion for foreign investors. By removing bureaucratic hurdles and administrative complexities, the UAE government aims to attract foreign investment and stimulate economic growth across various sectors.
Steps for Foreign Investors: Company Formation and Compliance in the UAE
Company Formation and Licensing
Foreign investors looking to capitalize on full foreign ownership opportunities must adhere to the company formation and licensing requirements prescribed by the relevant authorities. This may include:
Choosing the appropriate legal structure for the company (e.g., Limited Liability Company, Free Zone Establishment, etc.).
Obtaining the necessary permits, approvals, and licenses from regulatory bodies.
Complying with sector-specific regulations and requirements.
Compliance and Governance
While full foreign ownership offers investors greater control and autonomy, it also entails responsibilities in terms of compliance and governance. Investors must ensure adherence to local laws, regulations, and best practices governing corporate governance, financial reporting, and transparency.
Embracing a New Era of Investment
The introduction of full (100%) foreign ownership of companies in the UAE marks a significant milestone in the country’s journey towards economic diversification and growth. By eliminating the requirement for a local sponsor or partner in certain sectors, the UAE government aims to attract foreign investment, stimulate innovation, and enhance the competitiveness of its economy. With a clear understanding of the regulatory framework, eligibility criteria, benefits, and practical considerations, foreign investors can capitalize on this historic opportunity to establish and grow their businesses in one of the world’s most dynamic and vibrant business destinations. As the UAE embraces a new era of investment and economic liberalization, the possibilities for foreign investors are boundless.
By partnering with Raes Associates, foreign investors gain access to a wealth of knowledge, resources, and support services that streamline the process of establishing and operating a business in the UAE. Our commitment to excellence, integrity, and client satisfaction ensures that investors receive personalized attention and guidance every step of the way, enabling them to navigate the complexities of the UAE business landscape with confidence and clarity
