What you need to know about the new updates on business law in the UAE?

Many recent changes have been made to build a flexible business environment in furtherance to the vision of the United Arab Emirates to make the country the leading business hub in the region, one that establishes a business-friendly environment. Aligning to this goal, the UAE has made changes to the commercial company's law (Federal Law No. 2 of 2015 and its amendments), allowing for the first time in the history of the UAE, one hundred per cent ownership to foreign ex-pats. With the latest changes, complete foreign ownership is allowed in mainland companies within certain industries, which was earlier allowed only with the appointment of either a local company or an individual as the local agent.

• Full Foreign ownership: The most important changes made to the UAE companies' law (Federal Law No. 2 of 2015) bring in 100 % foreign ownership limited to commercial and industrial activities, whereas professional business activities are excluded at this stage. With this change, a new UAE mainland company (as opposed to a free zone company) can be constituted with its full ownership rights vested with foreign ownership. This is a landmark change compared to the previous position wherein it was a mandatory requirement that 51% shareholding was vested with a UAE national (individual or corporate entity). Certain strategic sectors have been exempted from this change.
• Branches of foreign companies: Additionally, a foreign company was not allowed to establish a new branch in the UAE without having nominated a UAE national as a local service agent. Now, branches of foreign companies licensed in the country can be changed into commercial companies in the UAE. Up until now, anyone wishing to open a branch of a foreign company in the UAE mainland would require a local agent. The agent would be named on the license, and once again, paid a fee for their services. This is no longer the case. Overseas business owners can now open branches within the UAE mainland without requirement for a local agent.
• Joint Stock Companies: The new changes also apply to joint-stock company laws. The previous requirement that needed a UAE national to be made a board member has been removed. In another change, the shareholders of a joint-stock company have now the right to sue companies over the failure of directors in performing their duty and if the same has resulted in loss or damage. In other changes, private joint-stock companies now have the right to sell up to 70% of shares through an initial public offering, as compared to previous the previous restriction of 30 %.
• Single shareholder LLC companies: In another landmark reform, foreign investors are allowed to establish a single shareholder LLC company. Earlier to the amendment, this provision was reserved only for UAE nationals. However, the change applies only if the activity of the company does not fall under the 'strategic impact list'.

Changes to UAE visa rules:

In furtherance to making the UAE an attractive destination with significant foreign direct investment, substantial changes have been made to the visa rules, allowing for an even more diverse range of investors and specialized professionals to benefit from the new policy that allows them to enjoy a much longer stay in the country than previously possible.

The eligibility criteria for obtaining a golden visa is either based on the parameters of investment or if the applicant concerns specialized talents and researchers in the fields of science and knowledge such as doctors, specialists, scientists, inventors, as well as creative individuals in the field of culture and art. The advantages provided under this visa policy extends to the spouse and children. All categories are required to have a valid employment contract in a specialized field that is being prioritized in the UAE. If proceeding with the investment route, it covers investment in the public sector in public investments of at least AED 10 million.

The new changes have been critically aligned with the economic reforms initiated in the region and aim to build a flexible business environment in the UAE, one that furthers the economic prosperity in the region. The new laws have set the UAE apart in the Middle East. Not only as a great place to do business, but as a great place to live, build a life, and integrate for the long term. The new changes thus aim to attract more foreign direct investments and to build a heavily diversified economy.

Dr. Hassan Elhais is a legal consultant in Dubai, specializing in the drafting of all statements of claim, memos and consultation on litigation of all manner.