In a landmark move, the UAE on Monday executed sweeping reforms to its commercial company ownership laws.
The move, which comes in the wake of recent changes to personal and family laws and reforms to visa rules, is aimed at attracting foreign capital and improving the ease of doing business in the country.
Here are seven major takeaways from the reformed commercial company ownership law, according to law firm BSA Ahmad Bin Hezeem & Associates.
- Companies will no longer be required to have an Emirati national as a majority shareholder in onshore companies, nor will they be required to have a UAE national or a local company as registered agents.
- Some sectors, including oil and gas, utilities and transport, are exempt from the new law.
- These changes will supersede the Foreign Direct Investment Law (Federal Law by Decree No. 19 of 2018 regarding FDI), which is cancelled.
- Companies that wish to go public can also sell 70 per cent of their shares in an IPO, instead of the previous limit of 30 per cent – a move that could help boost the liquidity of local stock markets.
- These new clauses will be added to the current Commercial Companies Law, which will have 51 articles amended – and three new ones added – to accommodate changes.
- Most of the changes are expected to relate to limited liability companies (LLCs) and joint stock companies.
- Local authorities such as the Department for Economic Development will be able to regulate participation levels of Emiratis in companies.
"The UAE is a trailblazer for change in the GCC and the region, and we look forward to reviewing the text of the law to understand the details and scope of its application," said Michael Kortbawi, partner at BSA Ahmad Bin Hezeem & Associates.
"As you can imagine, we are already flooded with enquires from clients wanting to know more and take advantage of the new law."
The amendments "will no doubt encourage investment in the UAE and lead to economic growth", he said.
Read more on UAE's rule change: