United Arab Emirates:
What You Need To Know About The New Updates On Business Law In The UAE?
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Many recent changes have been made to build a flexible business
environment in furtherance to the vision of the United Arab
Emirates to make the country the leading business hub in the
region, one that establishes a business-friendly environment.
Aligning to this goal, the UAE has made changes to the commercial
company’s law ((Federal Law No. 2 of 2015 and its amendments),
allowing for the first time in the history of the UAE, one hundred
per cent ownership to foreign ex-pats. With the latest changes,
complete foreign ownership is allowed in mainland companies within
certain industries, which was earlier allowed only with the
appointment of either a local company or an individual as the local
agent.
- Full Foreign ownership: The most important
changes made to the UAE companies’ law (Federal Law No. 2 of
2015) bring in 100 {e421c4d081ed1e1efd2d9b9e397159b409f6f1af1639f2363bfecd2822ec732a} foreign ownership limited to commercial and
industrial activities, whereas professional business activities are
excluded at this stage. With this change, a new UAE mainland
company (as opposed to a free zone company) can be constituted with
its full ownership rights vested with foreign ownership. This is a
landmark change compared to the previous position wherein it was a
mandatory requirement that 51{e421c4d081ed1e1efd2d9b9e397159b409f6f1af1639f2363bfecd2822ec732a} shareholding was vested with a UAE
national (individual or corporate entity). Certain strategic
sectors have been exempted from this change. - Branches of foreign companies: Additionally, a
foreign company was not allowed to establish a new branch in the
UAE without having nominated a UAE national as a local service
agent. Now, branches of foreign companies licensed in the country
can be changed into commercial companies in the UAE. Up until now,
anyone wishing to open a branch of a foreign company in the UAE
mainland would require a local agent. The agent would be named on
the license, and once again, paid a fee for their services. This is
no longer the case. Overseas business owners can now open branches
within the UAE mainland without requirement for a local agent. - Joint Stock Companies: The new changes also
apply to joint-stock company laws. The previous requirement that
needed a UAE national to be made a board member has been removed.
In another change, the shareholders of a joint-stock company have
now the right to sue companies over the failure of directors in
performing their duty and if the same has resulted in loss or
damage. In other changes, private joint-stock companies now have
the right to sell up to 70{e421c4d081ed1e1efd2d9b9e397159b409f6f1af1639f2363bfecd2822ec732a} of shares through an initial public
offering, as compared to previous the previous restriction of 30
{e421c4d081ed1e1efd2d9b9e397159b409f6f1af1639f2363bfecd2822ec732a}. - Single shareholder LLC companies: In another
landmark reform, foreign investors are allowed to establish a
single shareholder LLC company. Earlier to the amendment, this
provision was reserved only for UAE nationals. However, the change
applies only if the activity of the company does not fall under the
‘strategic impact list’.
Changes to UAE visa rules:
In furtherance to making the UAE an attractive destination with
significant foreign direct investment, substantial changes have
been made to the visa rules, allowing for an even more diverse
range of investors and specialized professionals to benefit from
the new policy that allows them to enjoy a much longer stay in the
country than previously possible.
The eligibility criteria for obtaining a golden visa is either
based on the parameters of investment or if the applicant concerns
specialized talents and researchers in the fields of science and
knowledge such as doctors, specialists, scientists, inventors, as
well as creative individuals in the field of culture and art. The
advantages provided under this visa policy extends to the spouse
and children. All categories are required to have a valid
employment contract in a specialized field that is being
prioritized in the UAE. If proceeding with the investment route, it
covers investment in the public sector in public investments of at
least AED 10 million.
The new changes have been critically aligned with the economic
reforms initiated in the region and aim to build a flexible
business environment in the UAE, one that furthers the economic
prosperity in the region. The new laws have set the UAE apart in
the Middle East. Not only as a great place to do business, but as a
great place to live, build a life, and integrate for the long term.
The new changes thus aim to attract more foreign direct investments
and to build a heavily diversified economy.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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