The UAE government has revised its 2015 commercial company ownership laws, by amending 51 articles and adding three new rules, targeting to promote the country’s competitive advantage and attracting more foreign capital.
Khalifa bin Zayed bin Sultan Al Nahyan the President of the UAE issued the overhauled laws among which the most significant amendment is the abolition of the need for onshore companies to have a major UAE shareholder. With this new revision of the law firms will be now relieved from overhead costs, facilitate ease in doing business for foreign investors and offers flexibility to run business in any part of the country.
Besides this, the new amendment has also abolished the provision mandating for a UAE national or a UAE owned company as an agent, a clause that instructs companies to keep an Emirati as the head and majority of the board of directors to be Emiratis.
The local authorities still get the power to decide the level of participation by Emiratis in any firm and those companies part of strategically important industries like oil and gas exploration, utilities and transport and state-owned entities won’t be benefited from these new amendments.
The changes to the commercial companies’ regulations cancel the foreign direct investment law (19) of 2018, with this any non-Emiratis wishing to set up a business in the UAE can now establish it irrespective of their nationality.
Sheikh Mohammed bin Rashid, Prime Minister and Ruler of Dubai stated that the country is offering a conducive legislative environment for investment.
The majority of the amendments will come into effect by next month, the revisions related to foreign ownership, agency and boards of directors will be effective only after six months. Companies will get one year time to comply with the amended law from the time the article comes into effect.
A notable alteration in the law which will help to boost liquidity in local capital markets is for companies that wish to go public. As per the new amendment a company wishing to become a public joint-stock company can sell no more than 70 percent of the company after the necessary review, instead of the current 30 percent, through an initial public offering.
Other notable changes include a provision to remove a senior executive or chair of a firm if they are found guilty of fraud or abuse of authority. Shareholders are now given the provision to sue a company in civil court if it fails to complete its duty which results in damages. Moreover, Electronic voting at annual general meetings is now permitted.
Under provision 10 of the new law, a committee including representatives from relevant authorities will supervise the activities which have strategic impact and the necessary measures required to license companies that operate in such areas.