Is the UAE about to allow full foreign ownership of companies?
The UAE's Federal National Council (FNC) will be reviewing a draft commercial companies law that would allow full foreign ownership of certain firms, with certain conditions.
“Members of the House will debate in a two-day session a draft commercial law that will allow 100 per cent foreign ownership of some companies, within specific conditions,” Gulf News quotes Ali Eisa Al Nuaimi, a representative from Ajman, as saying.
The draft legislation would authorise the Cabinet, on advice from the Minister of Economy, to name companies which would be fully owned by foreigners.
Al Nuaimi told Gulf News eligible companies would “have to be within the industries that have certain priorities within the economy, such as aerospace, communications and petrochemicals.
“These companies should bring added value in terms of providing their expertise to support the UAE’s continued development and growth. They should also hire large numbers of Emiratis, with each offering 100 jobs or more to citizens.”
“The law is meant to improve the business landscape in the UAE and make it easier to do business and potentially boost the economy. It will enforce strict corporate governance standards in accordance with international practices,” Al Nuaimi added.
The draft law would also open up the jurisdiction for free zone companies wishing to operate in the UAE outside of the free zones, Gulf News quotes him as saying.
Al Nuaimi reportedly said the committee would suggest making governance rules applicable to all members and chairs of the board, removing particular partnership companies from the draft law and making it obligatory for company founders to return share cash plus interest in the event public joint stock companies are not set up.
The committee also stressed that foreigners may not be allowed to act as agents of foreign companies and that labour shares can only be accepted from acting partners.
The draft law will not apply to companies excluded by a Cabinet resolution, such as those wholly owned by federal or local authorities, companies in which the federal or local authority, or any establishment, authority, department or company controlled or held by any of the foregoing (directly or indirectly) holds at least a 25 per cent shareholding and which operates in oil exploration, drilling, refining, manufacturing, marketing or operating in the energy sector in power generation, gas production, or water desalination and distribution.
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