Widely discussed Foreign Direct Investment Law, which allows expatriate investors 100% ownership with effect from December 1, 2020, thus can be the game-changing on the investment landscape of the nation was approved by President His Highness Sheikh Khalifa Bin Zayed Al Nahyan and which amends Law No. 2 of 2015 on companies and their shareholding.
In 2019, the UAE Cabinet had approved a Positive List of activities under which 100 percent foreign ownership in companies outside free zones was permitted. However, this remained subject to certain criteria being satisfied.
The list covers key sectors – agriculture; manufacturing; transport and storage; hospitality and food services; information and communications; science and technology; healthcare; education; art and entertainment; and construction.
Cabinet Resolution No.16 of 2020 also sets the condition that companies need to invest in new technologies, contribute to research and development and meet the requirements of UAE licensing entities.
The Positive List includes a number of interesting activities such as manufacturing of toys, sports goods, electrical equipment, consultancy services, advertising, photographic activities, construction of buildings, translation services, primary, secondary and higher education, hotel and restaurant management, hospitals and music bands, among others.
However, full ownership law will have a positive multiplier effect in form of the creation of jobs, an increase in productive capacity, resulting in less need to import because goods are produced in the domestic economy.
Key Points of the amendments:
- The new amendments allow non-joint stock companies to engage in investment activities on behalf of third-parties if laws governing these activities allow it.
- This amendment includes some provisions for organizing the business of a company with limited liability and also one-person entities.
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