UAE ponders change in foreign ownership rules - report

FOREIGN OWNERSHIP: Change in UAE rules on the agenda. (Getty Images)

Legislation is expected to be submitted to the UAE Cabinet within two months allowing for a change in ownership rules for firms set-up in the UAE by foreigners.

Under the initiative, international companies would be allowed to hold 100 percent ownership of businesses they establish in the UAE, the National reported on Sunday.

At present, foreigners must have a UAE national as a sponsor and are limited to a maximum 49 percent stake, except in free zones.

''A lot of industries worldwide are very interested to move here to the UAE, providing there are certain terms and conditions they would like to see in the industrial law,'' Sultan al Mansouri, the Minister of Economy, said, according to the newspaper.

"The law to allow 100 percent foreign investment is ready, but still under study and should be finalised within the next two months. We are especially looking into certain sectors such as hi-tech and hi-value," the minister told Gulf News during an inspection visit to the Abu Dhabi Co-operative Society. 

No indication regarding the possible limit of foreigners' stakes in private companies was given, the paper added.

The move, if implemented, would pave the way for technology firms to make large capital investments in the UAE and in the longer term diversify the economy away from its present over reliance on hydrocarbon revenues.

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READERS' COMMENTS

Change in Business Ownership Rules
Posted by Tedie Hudson, Riyadh, Saudi ARabia on Tuesday 10 November 2009 at 08:35 UAE time

With the severe downturn in foreign investment Real Estate, Dubai must do something dramatic to encourage foreigners to move back again. Risk is bad enough in today's economy and adding the Emirati partner factor does not "encourage" business to come. The real estate is down enough back home and what incentive would bring them to dubai? With real estate it main income producer, unlike it neighbors with oil to recovery with, Dubai needs to rethink it direction and come up with a true identity. Is it another Hong Kong or is it a Mirage...oasis with no water?

change in ownership rules
Posted by mukesh, dubai, u.a.e on Thursday 24 September 2009 at 10:45 UAE time


whatever is decided must be thought through and implemented by tightening all loose ends from all angles. that is most important. there will be many view points on any topic but whatever view point the establishment has should be clear. atleast that is a pre requisite. in the past few years due to the high speed at which the city has tried to move the requiaite legislation has not been able to keep pace resulting in a lot of grey areas and disillusionment be it in the property sector or sponsorship. this can be avoided by having clarity across the board.
thank you

Dubai
Posted by i want my dubai back! on Tuesday 15 September 2009 at 15:05 UAE time

Omar - I suggest google up the word 'Dubai' and then choose the enteries under the 'News' from the options bar seen at the top left corner.
There are around six or seven news articles on Dubai that appears today.
Suggested reading - the New York Times article dated 14th Sept and Telegraphs's article of the same date.

Another law, again not studied properly
Posted by Behrooz, Dubai, UAE on Tuesday 15 September 2009 at 14:42 UAE time


1- Dear Paul;
Of course free zones already exist with %100 ownership for non-locals, but the business regulation for free zone companies are basically different to those operating in the city.
This covers and includes their branches, offices and their allowed trading foot print. Legally speaking they are very restricted to operate with other emirate as well.
Companies in the city (Economic Development Department) are much less restricted and can operate national wide.
For instance a free zone company can not sell goods directly to the city market, legally.

2- The law would not be clear and this sort of legislation always is a recipe for headache.
Hi-Tech and hi-value? where are the boundaries? who define if one business is exactly falling into these categories or not? Is it enough to mention hi-tech in the list of your activities? etc.

4- What happens to older companies who established their brands and reputation over years and have %49 of their company? Will they automatically be %100 owner? if yes then what about the %51 ownership of the local sponsor?
If no, how to justify the injustice? If they need to dissolve the old company and establish the new one, what is happening to the history of the company? who decides about the ownership or division of the assets and profits at the time of dissolve, between the local sponsor and the real owner if thing not going into the right path?

5- For many locals, being companies sponsor is a main source of income for many years. Many from Al Ain, RAK, and other less developed places are sponsoring others for money, and they would not be happy of this regulation.

I think this law must be published and reviewed by business owners and if the government is serious about recovery, they should listen to real people advises and suggestions, before going on-air with new things, as they did and failed several times.

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