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Tue 21 Jun 2011 09:38 AM

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UAE has no plans to roll out 100% foreign ownership

Planned company law will keep foreign holding cap at 49%, says senior ministry official

UAE has no plans to roll out 100% foreign ownership
Foreign investors are currently only allowed to own 49 percent of firms in the UAE established outside the countrys free zones

The UAE has no plans to raise the 49 percent foreign ownership
cap for companies, a senior economy ministry official said Monday, dashing
hopes a planned company law would allow expatriates to fully own firms outside
of the country’s free zones.

“The companies law, the new one, will maintain the same
percentage in terms of ownership,” said Mohammed Al Shihhi, undersecretary at
the economy ministry told reporters.

“We have the free zones that give 100 percent ownership and
at the moment there are no plans to change that. We will continue with the
current incentives, such as no tax.”

Existing laws in the Gulf state bar foreigners from owning
more than 49 percent of a company, with an Emirati sponsor holding the
remaining 51 percent. The exceptions are the free zones, which allow 100
percent foreign ownership but can require significant start-up costs.

UAE Economy Minister Sultan bin Saeed Al Mansouri said in
February that a new UAE companies law could be introduced before the end of
2011. The law was expected to relax ownership caps in some corporate sectors.

Foreign ownership limits were a key criteria set out by
index compiler MSCI in its review of UAE for an upgrade from its frontier-market
rating to emerging-market status.

Countries designated as emerging markets by MSCI must have
“significant” openness to foreign ownership, the index provider’s website said.
But analysts said Monday the UAE may have done enough to secure its upgrade, despite retaining its ownership caps.

An upgrade of the Gulf state’s $110.3bn stock markets is
likely to open up the bourses to multibillion-dollar liquidity and drive index
fund investments. A decision is expected today.

Shihhi also said the UAE would launch an investment map to attract
investment, boost growth and reduce dependency on the oil sector across the

Foreign direct investment accounts for 13 percent of the OPEC
member’s GDP. Dubai, which account for 80 percent of the UAE’s non-oil trade,
said in February it expected to see a 30 percent jump in FDI this year as it
recovered from its debt crisis.

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micky mouse 9 years ago

Who cares and who would want to live in such a country? Expensive and too hot

Trussardi 9 years ago

Too bad that the rules regarding foreign ownership don't change. And although I wished for 51+% foreign ownership for foreigners outside the freezones, I did not really expect it to happen since this has been a hot topic for years, but no big changes were made in this time.
I cancelled my consulting company in one of the big freezones of the UAE and I'm moving to Singapore. Less expensive, quick and easy procedures and 100% ownership. I loved being in the UAE, but unfortunately staying there did not make any sense anymore.

disturbed of dubai 9 years ago

it would be a disgrace if the rating status was upgraded given this iniquitous rule.

Bob 9 years ago

It will be the smartest business move you will ever make.
I only wish that I had moved to Singapore sooner than I did.
I have even expanded my business here.
Two absolutely different business environments
No more frustration and lack of transparency

Daithi 9 years ago

Bob, what are the benefits in Singapore? What are the tax rates? I was in UAE, moved to USA and am considering a return to UAE. But never thought of Singapore - have been there and liked it though