UAE COMPANIES LAW UPDATE

Setting up a company in the UAE

New Zealand businesses looking to establish a foothold in the UAE have many options.

They can choose between setting up in the UAE mainland, or, in one of the many free zones in the UAE. 

Businesses will typically choose to incorporate a company “onshore” in the UAE mainland if they intend to operate in the local UAE market. 

By contrast, entities that set up in a free zone are can operate in that free zone, but not mainland UAE. 

Ownership of companies

Companies incorporated in the UAE mainland are required to have at least 51% local Emirati shareholding i.e. the maximum allowable foreign ownership is 49%.

Entities set up in a free zone can have 100% foreign ownership. 

This ability to retain 100% ownership makes setting up a free zone entity preferable for many businesses, even though this will impact on their ability trade in the local UAE market. 

Change in ownership of mainland companies

Earlier this year Sheikh Mohammed Bin Rashid Al Maktoum, the Prime Minister of the UAE and the Ruler of Dubai, announced on Twitter that the UAE would allow 100% foreign ownership of mainland companies. 

https://twitter.com/search?q=100%25%20foreign%20ownership&src=typd

It is expected that the scope of the change – at least initially – will be limited to certain sectors and industries.  However it is still a significant development and may signal further changes in the future. 

A new law implementing the change is anticipated shortly.

For practical legal advice specific to your business, contact Hesketh Henry’s specialist Transport and Trade team:

https://www.heskethhenry.co.nz/Our+Services/Transport+and+Trade.html.

Disclaimer: Hesketh Henry does not advise on UAE law.  We have strong relationships with a number of law firms in the UAE who can give detailed advice on setting up in the UAE.