The resolution passed by UAE Government stating 100% foreign ownership is largely welcomed by foreign investors across the world who are looking to set their foot on the UAE mainland.
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Until now, for opening a Limited Liability Company in UAE there was a requirement of a UAE National to sponsor the company and own the major shares (51%).
100% Foreign Ownership – Highlights of the New Resolution
Based on the recent resolution there are amendments to this clause and now there is 100% foreign ownership across a list of permitted activities under the mainland license. (For Limited Liability Company structure)
As per sources, almost 122 business activities in the manufacturing, agricultural, and service categories are categorized into the permitted list. The aim is to drive foreign direct investment as share capital from foreign investors who wish to start a mainland company in UAE.
The businesses will be made eligible for 100% foreign ownership through a thorough assessment of various factors accordingly by each emirate.
Criteria for Qualifying for 100% Foreign Ownership in UAE Mainland
There are various criteria for foreign companies to qualify for 100% foreign ownership in UAE. A few of them are:
- There must be a minimum share capital for companies that wish to register. Depending on the industry sector, and the nature of the business activity, the government has a list of minimum share capital required to obtain a mainland license.
- For example, a company manufacturing food products must have a minimum capital of AED 15 million to obtain a Commercial License.
- The companies under 100% foreign Ownership must comply with the Emiratisation targets as per the requirements stated by the UAE Ministry of Human Resources and Emiratisation (MOHRE).
- Also, there are certain conditions specific to industrial sectors such as construction-related activities.
- The companies that develop large-scale infrastructure projects (e.g. airports and highways), and,
- Utilizes modern production technologies and conducts industry-related research and development for the agriculture sector
Can Existing LLC Companies with UAE National Sponsor sift to 100% Foreign Ownership?
Yes, it is possible during the next renewal, however, it depends on a few factors first also on the current contractual agreement with the UAE National Sponsor and the exit clauses of the agreement.
Secondly, under meeting certain conditions and criteria the Ministry will issue 100% foreign ownership in UAE on a case to case basis currently. Hence, the transition from the current company structure to 100% foreign ownership is not so seamless and is dependent on a lot of factors.
What are the Steps in LLC Company Setup in UAE?
LLC Company Setup is one of the most popular company setups in the UAE. There are many benefits in LLC Company setup like:
- The flexibility in setting up the business anywhere in the Emirates that issues the Trade License.
- Depending on the office space, hire employees, and scale up easily.
- Easily set up new branches in the Mainland and strengthen the presence in the UAE Market.
- Relatively low maintenance and cost-effective office spaces available at less prominent locations
Steps in Setting up an LLC Company in Dubai
- Finalize the trade name and submit it for approval to Dubai Economy. Follow the name guidelines while choosing the Trade Name. Also, the name will appear in the Trade License and other company documents. It will also be present in future marketing materials and invoicing.
- Amending Trade Name at a later stage is slightly complicated and time-consuming as all records have to be amended individually.
- Choose the desired business activities from the list of permitted activities as per Dubai Economy. Certain special activities and industry sectors would require additional approvals.
- Even though there is 100% foreign ownership in the mainland, it has certain guidelines. So, if you are not meeting the criteria, it is advisable to find a local partner and register your company as an LLC Company.
- Accordingly prepare the shareholder certificate, memorandum of association, partnership agreement, and submit the documents to the Dubai Economy for review.
- Choose the desired office space and prepare the tenancy contract and submit it with other documents to Dubai Economy. Pay the required fee for obtaining the trade license.
- After obtaining the trade license from Dubai Economy, the investor can apply for a UAE residence visa and open a bank account for the company.
Aurion Business Consultant will guide you throughout the process and provide the required business support at all stages. To know more about 100% of foreign ownership in the mainland or the process of changing the local sponsor in UAE, talk to our team right away!
Connect with our expert team right away to know more about the process of changing the local sponsor in the UAE.
