By Andy Sambidge
Expats expected to get 100% control of firms in some sectors under new rules.
Officials are due to meet next week to finalise the draft Companies Law for the UAE which could see foreigners being able to have 100 percent control over their firms.
A committee of the Ministry of Justice will meet before the draft is sent to Federal National Council to be approved, Mohammed al Shihhi, the director general of the Ministry of Economy said, but he did not say when the law would be introduced.
In comments published by UAE daily The National on Tuesday, he said international firms in certain sectors, such as industry, would be allowed to own a greater stake under the new companies law.
“It will give special Cabinet approval to certain sectors to have more ownership than 49 per cent,” Al Shihhi told the paper, adding that certain sectors such as industry may be allowed 100 per cent ownership.
“It will offer special approval from the Cabinet for certain sectors and certain strategic projects with certain minimum capital,” he added.
The current law requires foreigners to have an Emirati as a sponsor and limits them to a maximum 49 per cent ownership of businesses. The exceptions are free zones, where foreign companies can have 100 per cent ownership.
The legislation is part of the government’s drive to encourage foreign investment while a separate proposed law to provide legal protection for overseas investors is also in the pipeline.
Meanwhile, Abu Dhabi, the largest and wealthiest emirate in the UAE federation, said it wants to attract more foreign direct investment and lift non-oil exports to boost their contribution to the emirate's GDP, a senior official said on Tuesday.
Mohammed Omar Abdullah, under secretary at the department of economic development, said Abu Dhabi is targetting foreign direct investment (FDI) of 23 percent of GDP by 2030, newswire Reuters reported.
FDI currently accounts for 14 percent of the emirate's GDP.
"Growth has to be driven by non oil exports to reduce GDP volatility through diversification and this will see Abu Dhabi (become) an attractive investment destination," he said at a conference organised by London-based MEED.
It is good to note that the companies law is being amended to make it more foreign investor friendly. But the implementation needs to be prompt. The Commercial Companies Law of 1981 was implemented only around 1990. Even to this day certain sections of the act have not been fully implemented (submission of audited financials to appropriate authorities within 4 months of the year end). Hopefully being a federal law the implementation of the new act will be prompt and uniform across the country unlike the present law which differs from emirate to emirate (minimum capital requirement).