Open Mainland Company legally with 100% Foreign Ownership in UAE
Want to open a mainland company with 100% foreign ownership? As per the new rules from the Ministry of Economy, UAE Allows 100% Foreign Ownership from June 1, 2021, in mainland businesses and companies. The UAE Commercial Companies Law now allows amendments for existing and new businesses in specific business categories.
Before making a move, one must be aware of the new rules related to the various segments and costs of operations under the new investment environment. There are the usual questions such as whether one has to pay the local sponsor Dubai in advance, in which segments one can make 100 % investment and what are the procedures to apply?
The Abu Dhabi Department of Economic Development (ADDED) has listed 1105 commercial and industrial activities for non-citizens to do business legally. Business Expansion for Foreign investors can partially or fully own these commercial and industrial sectors.
On the government website of Abu Dhabi, a complete list of activities is provided for 100% foreign ownership. The amendment also allows the existing companies a right to change their status provided they comply with the regulations on business activity.
Flexible Options for Mainland Company Establishment
In Dubai, the new laws apply to 1061 commercial activities from 2300 business activities provided in a detailed list provided by the Department of Economic Development (DED). Nearly half of the total trading and manufacturing activities are eligible for 100% ownership by foreign investors. To be eligible, one has to bring in a certain amount of investment technology and ensure mandatory employment of the UAE nationals in the new business setup.
Sharjah Economic Development Department (SEDD) also allows full foreign ownership in industrial and commercial activities.
The new law applies to the entire UAE. Each Emirate has the final say on the actual foreign ownership that can go up to 100% depending on the type of business.
If an existing Dubai Mainland Company renewal date is close by or planning to start a new business, they have to submit a business proposal with documents supporting the business model and industrial activity for a final decision on the ownership percentage.
There are no rules under the amendments asking for additional upfront fees is made by the Economic Department of any Emirate. One has to contact the economic department of the concerned Emirate for clarification on fees requirement.
As per the DED, some protocols need to be followed. These protocols are related to renewing or applying for a new license for 100 % foreign-owned businesses. Some are of these rules are discussed below:
- Business Setup in Dubai, for example, will require investors to complete the application process through service channels of the Dubai Ministry of Economy or the ‘Invest in Dubai’ digital platform.
- The existing business remains with a local UAE partner unless there is a proposal to reduce their shareholding or complete withdrawal of local Emirati partnership from 51% legally.
- The official rules and regulations and the procedure to set up a business in UAE remain the same.
- There is no requirement for additional fees, capital, or any bank guarantees required for full foreign ownership except to the extent of the buyout of the local UAE national shareholding stake.
- It is not possible to change the legal form of LLC to a sole proprietorship. However, it can be transferred to a single investor with limited liability.
- 100% foreign ownership is not allowed in commercial agencies, as Commercial Agencies Law regulates them.
An existing LLC business in Mainland who wants to convert to a sole proprietorship business will have to get the amendments done in the following process:
- Application to the authorities for license amendment.
- Amendment of Memorandum of Articles (MOA) of the company.
- Fees for an amendment to be paid to the Department of Economic Development (DED).
- Approval is required for the new 100 % foreign ownership in Mainland Company Setup in Dubai from the Department of Economic Development.
If you need assistance to set up your mainland company with 100% Foreign Ownership. Contact Business Link UAE for immediate support. Write to us info@businesslinkuae.com or call 00971556070118 to book an appointment with our agent for setting up your business in Dubai.
