The UAE attracts investors, entrepreneurs and business owners from every corner of the globe. Such is its international popularity that the population is estimated to be almost 90% foreign citizens.
Traditionally, while those from overseas are free to start businesses here in the UAE, they were unable to maintain 100% ownership when operating in the mainland. This is no longer the case. In this article, we’ll cover what’s changed and why, including:
- 100% ownership in Dubai Mainland – What changed?
- Eligibility criteria for 100% ownership of businesses in the UAE
- Benefits of the 100% foreign ownership of businesses in the UAE
- Why work with BIZ?
100% ownership in Dubai Mainland – What changed?
Until recently, entrepreneurs setting up in the UAE mainland would only be able to retain a 49% stake in their business. The other 51% would be held by a local sponsor.
These sponsors would be either individuals or corporate entities. If individuals, they had to be Emirati nationals and hold professional standing. Sponsors were paid an annual fee for their services and held no decision-making powers or claim to profits.
There were some exceptions to this rule. Professional services companies could be owned 100% by foreign nationals. International entrepreneurs also had the option of setting up in a free zone and benefitting from 100% ownership in all cases, as well as zero currency restrictions, 100% customs tax exemptions and profit and capital repatriation.
The official wording of the new rules is as follows:
‘Foreigners are allowed to establish companies with 100% full ownership, based on the provisions of Federal Decree-Law No. 26 of 2020 amending the provisions of Federal Law No. 2 of 2015 on Commercial Companies.
The law annuls the requirement for commercial companies to have a major Emirati shareholder or agent, thus providing full foreign ownership to non-Emiratis of all nationalities of onshore companies established by them.
In addition, firms wishing to become joint stock companies can, after the approval of relevant authorities, sell through IPOs, no more than 70% of the company, instead of the earlier 30% limit.’
Eligibility criteria for 100% ownership of businesses in the UAE
Right now, those most impacted by the change in ownership regulation are those wishing to start or relocate a business to Dubai. Around half the business activities permitted by Dubai’s Department of Economic Development (DED) allow for 100% foreign ownership.
Notable exclusions to this rule are industries such as oil and gas, telecoms, and transport.
Outside of Dubai, the rules differ somewhat. While 100% ownership is permitted in some cases in Abu Dhabi, most of the time foreign business owners must adhere to the 49/51 rule and partner with a local sponsor. Other emirates such as Sharjah and Umm Al Quwain are yet to detail their full plans for 100% foreign ownership.
Benefits of 100% foreign ownership of businesses in the UAE
The new foreign ownership laws were introduced to make the UAE an even more attractive prospect for international investment. Allowing such an ownership model in most cases brings the country in line with most other business hubs around the world and will vastly increase an already incredible ease of doing business.
The move will also create more competition in the market, helping to stimulate and diversify the UAE economy. Foreign investors can now exercise complete control from a legal standpoint, allowing them to run their business without administrative complications or interruptions.
How to start a UAE business with 100% ownership
The first step in starting a UAE business with 100% foreign ownership is to partner with a local company formation expert. When you work with Business Incorporation Zone (BIZ), your dedicated contact will guide you through the following four-step process, liaising with all relevant authorities along the way.
1. Selecting your business activities
First, you will need to outline your intended business activities and align them with the permitted list published by the DED. It is important to do this first as you will need to be sure that your chosen activity or activities allow for 100% ownership. Your chosen activities can also impact the location and setup type that is right for you.
2. Choosing and registering your company name
Next you will need to choose a name for your business. When choosing a company name out here in the UAE, you must abide by a strict set of naming conventions.
In short, you should avoid any offensive or blasphemous language. Avoid names of well-known organisations and avoid abbreviations if naming your company after yourself – i.e., Dave Mann Consulting, rather than D Mann Consulting.
BIZ will then register your new trade name for you.
3. Making your licence application
At this stage, you can apply for your UAE trade licence. This application is made to the local DED or equivalent in your chosen emirate. In many cases, this process takes place online.
Once again, BIZ can assist with this step, managing the entire application process for you.
4. Making your visa applications
You will need a residency visa to work in the UAE. The visa application process consists of several steps including biometric scanning, a blood test, medical and a chest X-ray.
As the holder of UAE trade licence, you can also sponsor others for their visas too. This could be a spouse, parent or child, or a domestic worker such as a housekeeper.
5. Opening a corporate bank account
Finally, you will need a corporate bank account to trade out here. It is not always easy for non-GCC citizens to secure banking services, so once again it is a good idea to partner with a local expert such as BIZ when taking on this stage of the process.
Why work with BIZ?
New regulations have made business setup in Dubai with 100% ownership incredibly easy. And when you work with a trusted partner such as BIZ, it gets even easier.
Our team of company registration professionals can guide you through the entire process of LLC company formation in Dubai, assisting with visas and bank account opening, even advising on the most appropriate financial institution to suit your specific needs.
In all, our expert team can establish your company on your behalf, make your licence and visa applications, and take care of all the necessary admin.