The New UAE Foreign Direct Investment Laws which determine the nation’s business infrastructure has come into effect on 23rd September 2018. This blurb points out the key points taken from the new FDI Law and its effect on the foreign investor community.
The UAE has been the major destination of FDI inflows around $11 billion in 2017, of which 22 percent of the total flow to the Middle East and North Africa region.
According to Article 10 of the UAE Commercial Companies Law1, it sets out the foreign ownership restriction which requires that 51% or more of the shares of companies established in UAE must be possessed by a UAE national shareholder. The UAE government changed the UAE Commercial Companies Law2 to permit the UAE Cabinet for the increased level of foreign investment in certain companies and sectors in September 2017.
As per the new FDI Law3, the government exercises its powers with respect to increased foreign investment share and sets out the guidelines in which the foreign investors must follow in order to obtain more than 49% of company shares operating in certain sectors of the economy. The new FDI Law also founds two government bodies: a Foreign Direct Investment Unit and a Foreign Direct Investment Committee. If a foreign investor likes to own more than 49% shares in a Foreign Direct Investment Project, he can apply for a permit to establish a Foreign Direct Investment Company.
The UAE Minister of Economy Sultan Al Mansouri has already detailed the sectors under positive list where FDI is possible viz. technology, outer space, renewable energy, and artificial intelligence, among other sectors are under consideration like manufacturing. The sectors briefed under negative list are
- Oil exploration and Production,
- Investigation, Security, Military,
- Water and Electricity provision,
- Fishing and related services,
- Post, Telecommunication and other audio-visual services,
- Pilgrimage and Umrah services,
- Recruitment activities,
- Road and air transport,
- Printing and publishing,
- Commercial agency,
- Banking, and Financing activities,
- Medical retail (including pharmacies), Blood banks, Quarantines and Venom/poison banks.
The FDI unit will be in charge of setting up a far-reaching database for UAE investments, including information on existing FDI extends, and will survey and refresh data on a periodical premise. The FDI unit will likewise manage the making of an alluring situation for foreign direct investment, facilitating the procedures for registering and licensing foreign direct investment projects and monitor their execution in the nation. FDI ventures that exist before the new law will hold every one of the benefits given as per previous enactments, agreements, and contracts inside the predefined period. The much-awaited FDI law is expected to enable the UAE to become more investor-friendly and attract foreign investors. And the formation of companies in the UAE has become a hassle-free process with the help of experienced chartered accountants in Dubai.