Changes to the companies law announced last month are designed to increase the number of businesses operating in the UAE to one million within the next decade, from 300,000 currently, the Minister of Economy said.
Speaking at a press briefing on Wednesday, economy minister Abdulla Bin Touq said the changes to the companies law are aimed at increasing the openness of the country's business climate, attracting more foreign investment and helping to diversify the economy by generating more non-oil income.
The transformation of the UAE's economy "is a continuous and collective process", Mr Bin Touq said.
"In light of the recent economic changes and challenges that were witnessed globally as a result of the Covid-19 pandemic, the realisation of this vision and this transformation has become even more necessary and urgent.”
The changes will increase the confidence of foreign investors in the UAE market and "provide a greater opportunity for establishing productive partnerships between citizens and foreign investors", he said.
“We are expecting new companies to come in, more FDI (foreign direct investment) flow to the country and we are going to support those companies and direct them to right clusters and projects within the country,” Thani Al Zeyoudi, minister of state for foreign trade said during the briefing.
The UAE reformed its commercial companies' law last month, annulling the requirement for onshore companies to have an Emirati shareholder. It also introduced other measures to improve the ease of doing business.
Mr Al Zeyoudi, however, did not give a forecast on the extent to which he expects FDI to increase or how many companies he expects to set up operations in the country following the changes to the law.
Dubai Economy's director general Sami Al Qamzi said earlier this week that he expects foreign investment to the UAE will increase by 35 per cent due to the legal changes.
A provision that made it compulsory for a UAE national or a UAE-owned company to act as an agent has been annulled as part of the new measures. A stipulation that requires a company chairman to be an Emirati and for boards to have a majority of Emirati directors has also been removed.
The changes to the law have been welcomed by the business community, who have said it will reduce costs and improve competitiveness.
The amendment is also expected to encourage more companies to seek stock market listings, the head of the UAE's markets regulator said.
"There is no doubt that the new amendments to the commercial companies law will encourage local and foreign investment. It will encourage initial public offerings and listings in the country's capital markets and will increase the rate of transactions and attract foreign capital, which in turn will increase the depth and size of financial markets capitalisation,” Obaid Al Zaabi, chief executive of the Securities & Commodities Authority said during the event.