All About Foreign Ownership in the UAE

The UAE has become the leading international investment location in the world today, driven by legal reforms that enable foreign ownership. This article dives into a roadmap of these reforms, the advantages of complete foreign ownership, and step-by-step processes to establish your company in the UAE.

Legal Framework and Reforms

By 2020, the UAE government began a transformative period of restructuring the business landscape by introducing Federal Decree-Law No. 26 of 2020, amending the Federal Commercial Companies Law. This landmark reform abolished a decades-old stipulation that required local prevalence to act as partners or sponsors in numerous sectors, paving the way for 100% foreign ownership of companies. The move is part of a wider strategy to diversify the economy and attract global capital, making the UAE an even more attractive platform for international business.

Mainland Companies

Foreign investors can now wholly own mainland companies, eliminating the previous 49% foreign ownership cap. This broadens investment opportunities, though some critical sectors may still impose ownership limitations for national interest protection. Investors must conduct due diligence to determine which business activities qualify for full foreign ownership and which remain restricted.

Free Zones

The UAE’s numerous Free Zones offer significant advantages for foreign investors:

• 100% Foreign Ownership: Unlike many jurisdictions, Free Zones allow complete foreign control over businesses.
• Duty Exemptions: Businesses in Free Zones benefit from tax exemptions, improving profitability.
• Complete Repatriation of Profits: Investors can transfer all earnings outside the UAE without restrictions.
• Simplified Business Processes: Company registration, licensing, and leasing office space are streamlined.

These special economic zones are designed to facilitate international businesses, startups, and multinational corporations, ensuring a smooth operational framework.

Sector-Specific Restrictions

Despite the reforms, certain key sectors remain restricted due to national security and strategic interests. Investors must be aware of these distinctions and ensure compliance with UAE regulations while maximizing business opportunities.