Foreigners who open a company in the United Arab Emirates no longer need an Emirati shareholder or agent under changes to UAE company law. This means that business setup in the UAE is now easier. Previously it was mandatory for a foreign investor to get a local sponsorship to be able to invest in UAE. Thankfully, local sponsorship is not required for few business. Let’s look into the details of what actually the law regarding local sponsorship states.
From December 1, 2020, the Government of the United Arab Emirates (UAE) will allow certain foreign investors to have full local companies without an Emirati sponsor. This law applies to foreign investors who have 51% shareholding rights.
These changes will be made through the Foreign Direct Investment Act, adopted by Legislative Assembly No. 19 of 2018 and determination 16 gone by the UAE Council of Ministers in March 2020. 2 passed in 2015.
Under the current CCL, foreign shareholders may account for only 49 percent of LLC operating as a UAE offshore business. The law requires an Emirati-owned company or a citizen of the Emirate to manage the remaining 100 percent (51 percent) of the total allocation and act as a local sponsor.
The Foreign Direct Investment Act has amended the CCL with the addition of 51 new articles and reviews. Its amendments primarily address the founding companies with limited shareholder arrangements.
In March 2020, the Department of Economic Development (DED) released the Cabinet Resolution 16 of 2020 containing the “Direct List” and the requirements of 122 business activities tailored to the liberal needs.
If you are a foreign investor looking to start a business in UAE must go through all these documents carefully. It is advisable to hire a consultant who can help you with your business setup.