November 23, local time, the President of the UAE, Sheikh Khalifa bin Zayed Al Nahyan, signed the revised “UAE Business Company Law”, which will cancel foreign investment from December 1, 2020 Restrictions on the shareholding ratio of the local registered company. This move is considered to be a major move to open the UAE market, and it is also a good thing for Chinese companies operating in the Middle East.
Previously, according to the UAE Commercial Company Law, foreign investors who set up a company in the UAE have the right to hold no more than 49% of the equity (or share) of the UAE company, but companies in the free zone are not subject to this restriction.
The UAE’s free zone is similar to China’s economic and trade zone, in which foreign investors are allowed to hold 100% of the company’s equity (or shares), but the premise is that free zone companies can only carry out business activities in the free zone.
In September 2018, the UAE promulgated the “Foreign Direct Investment Law”, authorizing the UAE Cabinet to approve foreign investors to hold up to 100% equity (or shares) of companies in the UAE (ie, non-free zone) in certain industries. After the amendment of the UAE law
foreign investors will no longer need UAE citizens as guarantors to establish companies throughout the UAE, and the shareholding ratio will not be restricted.