UAE FDI Law: Positive List allowing 100% Foreign Ownership now in effect

UAE FDI Law: Positive List allowing 100% Foreign Ownership now in effect

- Jade Wong

Following the release of the UAE Federal Law No. 19 of 2018 on Foreign Direct Investment, the UAE Cabinet has now released the full Positive List of activities covered by the FDI Law, including the requirements and share capital requirement for each sector which fall into 3 x categories – Agriculture, Service and Industrial sectors. This positive list and the guidance has now come into effect.

The list of 122 approved activities under each sector will be eligible for 100% Foreign Investor ownership, an initiative which opens opportunities for Foreign Investors who intend to enter the UAE Mainland market.

The list of activities include:

  1. Administrative and support services
  2. Agriculture
  3. Art and entertainment
  4. Construction
  5. Educational activities
  6. Healthcare
  7. Hospitality and food services
  8. Information and communication
  9. Manufacturing
  10. Professional, scientific and technical activities
  11. Renewable energy
  12. Space
  13. Transport and storage

Criteria & Requirements for 100% ownership

Share Capital Requirements

Depending upon the sector and activity of the business, share capital requirements can vary between 2 and 100 million AED. Sectors, for example, related to Hospital activities, will require a Share Capital of 100 million AED.

For other sectors such as Manufacturing, Share Capital requirements vary depending on the type of manufacturing activity. For example, the Manufacture of Sports equipment would require 3 million share capital, whereas Manufacture of Machinery equipment would require 100 million AED share capital.

Conditions

There are certain conditions that the Foreign Investor must satisfy, which again will vary upon the sector/activity. However, below are some of the conditions that must be met :

  1. Use of new Technology
  2. Recognition of a high added value
  3. Contribute to Research & Development
  4. Meet the requirements of UAE Licensing entities

Key Benefits

  1. 100% Ownership
  2. Licensed FDI Companies are treated like UAE national companies
  3. Make financial project returns from outside of the country
  4. Flexibility to change partners, transfer ownership, change of legal form

Who can apply for 100% ownership?

1. FDI Projects listed under the Positive List

Procedure for Licensing an FDI Project under the Positive List

  1. Select Business Activity in Positive List and Legal Form (LLC or Private Joint Stock Company) - Note: FDI Capital should not be less than the minimum requirement
  2. Submit Foreign Direct Investment Licence application for approval
  3. Reservation of Trade Name
  4. Obtain approvals of entities concerned with FDI company activity
  5. Present proof of submission for joining Tawteen Partners Club
  6. Obtain approval and receive FDI Licence after paying fees
  7. Opening of Bank Account on behalf of the company
  8. Registration of the Licence with the Ministry of Economy

For FDI Licence applications of sectors within the Positive List, the maximum period for approval has been stated as five working days

2. Existing Company who would like to change to an FDI Company

    An existing company may change into an FDI company provided that the legal form is of one of the forms specified for FDI companies – specifically a mainland UAE LLC or Private Joint Stock Company.

    3. A Project Licence not under the Positive List

      It is also possible to apply if the project Licence is not under the positive list - for example, sectors such as retail, real estate activities, F&B and hotels. The foreign investor should submit their application for review to the Competent Authority of FDI. If submitted to the FDI Committee for consideration, the recommendation will subsequently be submitted to the UAE Cabinet.

      Applications under FDI 100% Foreign Ownership Law in Dubai and Abu Dhabi

      Currently, the application process in Dubai is transparent with the FDI handling applications in tandem with the DED and Ministry of Economy as part of the process.

      In Abu Dhabi as yet, we do not have a clear process for making the application for 100% Foreign Ownership however we expect to receive updates on this in the near future and we will keep clients informed.

      For more details on the specific positive list and the official publication by UAE FDI, please see the link here

      Please also see our previous update on the FDI Law Positive list for 100% ownership for UAE LLC Companies here

      If you need assistance in setting up a company and applying for 100% ownership, or if you have an existing company in mainland UAE and you are considering applying for 100% ownership, then please do get in touch and our team of experts will be happy to assist and advise you on eligibility and the steps and process required. Please do reach out to us on +971 (0)4 456 1761 for Dubai or +971 (0)2 448 5120 for Abu Dhabi, email us at info@ppg.ae or complete the contact form below and we will be delighted to assist with meeting your needs at this time.

      Jade Wong is the Business Development Manager Abu Dhabi at PRO Partner Group. For further information on 100% foreign ownership or any other related company set up, local partner or PRO service matter in the UAE and wider Gulf, contact Jade on jade@propartnergroup.com or complete the contact form below.

      Get in touch with Jade Wong

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