11 July 2019
UAE: Cabinet Approves 122 Business Activities Open to 100% Foreign Ownership
The United Arab Emirates (UAE) has opened 122 economic activities across 13 sectors for 100% foreign ownership, subject to approval by each individual emirate.
This ‘Positive List’ of business activities, approved by the UAE Cabinet on 2 July, relates to Article 7-3 of UAE Federal Law No. 19 of 2018 on Foreign Direct Investment also known as the FDI Law. The 13 sectors now open to full foreign ownership are transport and storage; agriculture; space; manufacturing; renewable energy; hospitality and food services; information and communication; professional, scientific and technical activities; administrative and support services; educational activities; healthcare; art and entertainment; and construction. A full list of the 122 business activities in English and Arabic can be found here.
The Cabinet has, however, made clear that it is at the discretion of the individual emirate authorities to decide on what specific percentages of foreign ownership are permitted for each sector or activity. The Departments of Economic Development (DED) for each of the respective emirates will determine these percentages, so is not necessarily the case that all activities will automatically qualify for full 100% foreign ownership.
According to global law firm, Baker Mckenzie, the Dubai DED is considering applications on a case-by-case basis from companies with activities included in the Positive List, but has indicated that the company will need to appoint a UAE national (or a company wholly owned by a UAE national) to act as the local service agent of the company. Other emirates have not yet released their individual requirements.
Under the FDI Law, foreign-owned companies enjoy a number of privileges. They are subject to the same regulatory regime as local companies; and may also transfer money outside the UAE including net annual profits, proceeds from the liquidation of the investment or the sale of all or part of their assets, and funds collected from the settlement of disputes in relation to their activities in the UAE.
Foreign-owned companies are also guaranteed confidentiality of technical, economic and financial information as well as some investment initiatives. Subject to obtaining the required approvals, they can have one or more shareholders; sell their business; change their legal form; or enter into a merger without losing the privileges awarded to them under the FDI Law. Their employees can also transfer their salaries, indemnities and entitlements outside the UAE.
There are also some conditions imposed on foreign-owned businesses, such as the requirement to maintain certain minimum share capital amounts; and in some cases commit to certain ‘Emiratisation’ targets set by the UAE Ministry of Human Resources and Emiratisation by joining the Tawteen Partners Club, which aims to boost the number of local workers in the workforce.