UAE's Foreign Direct Investment Law Aims To Boost FDI

26th November 2018

The UAE's long anticipated Foreign Direct Investment Law, Decree Law No. 19 of 2018, was recently issued and published in the Official Gazette. The purpose of the new law is to attract Foreign Direct Investment (FDI) into the UAE by enabling foreign individuals and companies to own up to 100% of onshore UAE companies in certain sectors.

As per the Commercial Companies Law, Law No. 2 of 2015, foreign shareholders were limited to owning a maximum 49% in a Limited Liability Company (LLC) onshore, requiring an Emirati individual or 100% Emirati-owned company to hold the majority 51% share as a local partner or sponsor.

Foreign Shareholders can apply to own up to 100% of UAE onshore Companies - Positive List

It is yet to be announced which sectors will be opened up for greater foreign ownership in the UAE. However, according to The National, UAE Minister of Economy, Sultan Al Mansouri, has said technology, outer space, renewable energy and artificial intelligence are among sectors being considered. The list of sectors is expected to be announced in Q1 2019 and will be known as the Positive List. It will be agreed by a newly formed FDI Committee. It is not yet clear what criteria a foreign owner might be required to meet in order to apply for increased ownership in a UAE onshore company, although measures relating to knowledge transfer and Emiratisation are anticipated to add increased value to the economy.

Sectors which will not be opened up for increased foreign ownership in the UAE - Negative List

A Negative List has been established and sectors included in the list will not be opened to increase foreign ownership. It should be noted that the sectors mentioned in the Negative List can be added to or removed, so it is always worth checking the status. The current sectors on the Negative List are as follows:

Oil exploration & production
Investigation, security, military, manufacturing of weapons & military equipment
Banking
Insurance
Hajj & Umrah services
Recruitment
Utilities (water & electricity)
Fishing
Post, telecommunication & audio visual services
Road & air transport
Printing & publishing
Commercial agency
Medical retail (pharmacies)
Blood banks & quarantines

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Written by Jenny Hunt, Founding Partner & CEO

Gateway Group of Companies, Abu Dhabi & Dubai UAE

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