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Amendments to UAE Commercial Companies Law

出版物 / 文章 / 2020 / UAE unveils Changes to Commercial Company Law
The United Arab Emirates (UAE) government, on Monday 23 November 2020, announced an overhaul to the country’s commercial company ownership laws.

It is worth noting that specifics of the decree, the actual text per the Official Gazette, have yet to be published, but here are six key takeaways of this new announcement.

Updated on 21 December 2020: Freemont Oneworld Group has obtained more information on the amendments since we last announced the changes, and this update serves to provide additional information against the original notification. On the basis that the Decree was gazetted on 30 September 2020, 2 January 2021 and 1 April 2021 and 2 January 2022 has been separately mooted as the effective dates for the Federal Decree Law No. 26 of 2020 and its respective applicable clauses.
  • An annulment of the requirement for commercial companies to have a major Emirati shareholder or registered agent, allowing for full foreign ownership of onshore entities.
    Update: 1 April 2021 is the mooted start date for when foreign investors may take advantage of the amended Commercial Companies Law, subject to any other applicable regulations.

  • Certain strategic sectors, such as oil and gas exploration, utilities and transport, and state-owned entities, are exempted from the new regulations. Relevant local authorities are empowered to regulate and oversee the degree of participation of Emiratis in companies.
    Update: In context, it remains to be seen the extent of which the relevant local licensing authorities, such as the Department of Economic Development of the respective emirates, will interpret the powers afforded under the decree, as well as the yet-unspecified strategically important industries’ list.
  • The Foreign Direct Investment Law (Federal Law by Decree No. 19 of 2018 on Foreign Direct Investment) has been superseded by this new law.
    Update: It is understood that the FDI Law, and the previously published list (‘Positive List’) of sectors in which foreign investors could retain 100% foreign ownership under the FDI Law is notw repealed under the new decree.
  • Companies who may be publicly-listed, upon the approval of the relevant authorities, may sell no more than 70 per cent of the company’s shares, an increase from the previous ceiling of 30 per cent.
  • Most of the changes announced are expected to affect and be related to limited liability companies (LLCs) and public joint stock companies.
    Update: It is understood that the amendments now allow for a one-person LLC to be established by a foreign investor (a natural or juridical person).

What does this mean?

In light of this recent announcement related to commercial companies regulation in the UAE, and against the backdrop of other decrees (such as the one related to succession planning and estate distribution of the deceased expatriate resident of the UAE; and the loosening of regulations for alcohol licensing and others), it serves to enhance the UAE’s image as a place to be, a jurisdiction to live in and conduct business from.

As this is a new development only announced on 23 November 2020, concrete details, specifics and guidance are still trickling down from official sources, but you can be rest assured that Freemont Oneworld Group is on hand to follow up and update you accordingly.
Update: The full impact of changes to foreign ownership restrictions in the UAE will not be clear until the list of strategic impact industries is announced, as well as the interpretation of the decree by the respective licensing and governing authorities throughout the UAE. Existing foreign investors may do well to assess and consider their existing arrangements (either those with a 51-49 shareholding arrangement, or a local service agent).

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