A crucial and risky decision turns out to be the concept of investing in a company. The investments are made to make a profit or obtain a higher rate of return on the investment made, irrespective of a newbie or an accomplished business professional. Imagine if you need to include a stranger as your business partner at this stage, owning most shares, just because he or she turns out to be a local individual.
Well, if you are a business investor and are searching for an investment forum, then you have arrived at the right spot. It turns out the UAE is the ideal solution to your dilemma. According to the latest report, without the involvement of any local sponsor, the government of the UAE has taken a drastic move to make business investors 100% foreign ownership.
Business Scenario in the UAE
The UAE has been reshaping itself as a global business destination along with time. The heat of the UAE, Dubai, has become a pivotal hub that has significantly increased the country's GDP. The United Arab Emirates ranked 11th in the ease of doing business, according to a study released by Doing Business in 2019. The UAE serves any business group, ranging from a small business to a multi-national organisation.
By 2019, the country's GDP is expected to rise to $460 billion, i.e. 2.8 per cent, and by 2020 it is expected to hit 3.8 per cent, helped by Dubai Expo 2020, which is expected to generate 25 million visitors worldwide. The Expo looks like a forum for business collaborations, and almost all countries are looking for it. It will not only increase the inflow of investment but will also build a robust global network.
To attract investment in an economy reeling from the coronavirus pandemic and a fall in oil prices, the UAE government today declared by decree that, without the need for an Emirati sponsor, foreign investors will be able to own local companies completely. The investment group of the UAE has accepted the initiative that will take effect on 1 December 2020. According to analysts, the new law amending the Companies and Shareholders Act No. 2 of 2015 would build substantial growth opportunities and draw more foreign direct investment.
The New Initiative
By authorising many business sectors that qualify for 100% foreign ownership, Sheikh Mohammed bin Al Rashid, the ruler of the UAE, has taken a drastic measure. Consideration is given to the total number of 122 economic activities across 13 regions. These sectors include renewable energy, space, agriculture, development, transport and storage, supply chain, logistics, food and hospitality, information and communication, etc.
We can say this move will raise the economy of the UAE to the next level. For international business investors, various investment gates would be open to come forward and invest in without any fear. The Emirati government has taken several steps over the years to ease the process of establishing companies. The UAE serves as an excellent foundation for the different realms when it comes to business opportunities. To know more about the top companies with enormous opportunities in Dubai, click here.
Next, let’s have a look at the advantages that you can obtain by incorporating a business in the UAE.
Advantages of Establishing a Business in the UAE
Once you continue to integrate your company into the UAE, you can achieve the following advantages:
1.Free Tax Deduction
For any business owner, tax tends to be one of the essential burdens. The Emirates Government has developed a tax exemption scheme for business owners and investors to bring relief, which turns out to be an enticing feature that draws their attention. So, Dubai turns out to be the right option if you want to free yourself from the tax burden.
Dubai's entire region has been divided into separate zones dedicated to various business platforms. There are different options available that are devoted to many firms, such as Mainland, Free Zone and Offshore. Following your business needs, you may pick the best venue.
3. Future Expo 2020
At this point, starting a company in Dubai turns out to be profitable, as Dubai Expo 2020 is on the way. As mentioned earlier, the meeting turns out to be one of the largest collaboration platforms, and by getting involved in the same, you can also help your business.
4. Easy Office Space
Once you've thought about starting your company in Dubai, you don't have to think about office space. Dubai has recognised and therefore provides the same with the need for personalised office solutions to fit any business need. The one that suits your business needs to be selected.
5. Company Convergence Ground
For its business conferences, exhibitions and meetings, which attract numerous individuals from different global areas, Dubai turns out to be the desired choice for business owners.
6. Simple Licenses for Business
You can come across a point where you need to apply for a business licence while conducting business operations. The claim is provided by the Department of Economic Development (DED), which serves as a legal permit for business activities to be carried out. Click here to get a complete idea of the current business licences.
7. Robust Network
When it comes to connectivity, the area has a robust network. There are all possible methods available, such as Airways, Rivers, and Roadways, which greatly simplify business operations.
8. Mass Crowd
Dubai's population turns out to be a blend of nationals from around the world. By integrating your company in Dubai, you will be able to target a wide range of different people's audiences and catch their interest correctly, which will be very helpful for your business.
9. Wide Choice for Company Expansion
You don't need to think about your business expansion once you set up your company in Dubai. You're going to have a quick way out to quickly grab the foreign market, which you can start by holding neighbouring markets such as Oman, Bahrain, Saudi, etc.
10. A Multinational Recruiting Network
It is a piece of well-known evidence that it is difficult for an organisation to operate on its own. To make your business excel in the market, you need to recruit the right individual for the right job. Dubai offers the absolute versatility of attracting qualified professionals from every corner of the globe and does not suggest any limitations.
11. Easy Choices for Visa
You need to provide them with an employment visa once you have found the correct candidates. You will need to make sure that at the initial stage, you collect the investor visa for yourself. The UAE government has taken various measures to speed up the process to ease the investors' business incorporation process.
The Founder, His Highness Sheikh Khalifa bin Zayed Al Nahyan, sanctioned the long-anticipated and hugely proposed Foreign Direct Investment (FDI) rule, which will have game-changing effects on the country's investment landscape.
What Does the Law Further Say?
As per the new FDI rule, from December 1, several business licence categories will no longer require Emiratis as sponsors with 51 per cent shareholding rights. The FDI Act, adopted by Federal Legislative Decree No 19 of 2018 in September 2018 and the corresponding resolution of the UAE Council of Ministers No 16 of 2020 in March 2020, amends the Commercial Companies Law (CCL) No 2 of 2015.
Under the current CCL, foreign shareholders in a 'Limited Liability Company' (LLC) acting as a mainland UAE corporation are limited to owning only up to a maximum of 49 per cent. Therefore the law allows an Emirati person or a 100% Emirati-owned business to hold a 51% share of the balance as a local sponsor.
The new law has updated 51 articles of the CCL, and recent reports have been introduced, primarily concentrating on the regulation of the provisions of limited liability shareholding companies created.
Several sectors considered to be strategic are, however, excluded from the new rules implemented today. These include hydrocarbons and electricity, telecommunications and transportation.
Many new entrepreneurs will expand their activities in Abu Dhabi, Dubai, and other Emirates because of the announcement of this rule. More developed businesses will consider the Emirates as their foundation for the GCC area and beyond. Not only on the investment side, but the effect should also be apparent. More generally, real estate should also benefit from the country's new skilled workers; the retail sector would see more visitors; more activities would be held by the hospitality industry and more tourists would be invited. In other words, the entire UAE ecosystem is gaining significance.
The new initiative is turning out to be of great benefit to company owners, investors and entrepreneurs. At this point, setting up a company in Dubai turns out to be a golden opportunity that you can't afford to miss. You can face unique challenges during the incorporation process as you proceed forward. Tap here to hear about the top challenges faced by company owners. At the initial move of the formation process, the smart choice for company owners is to get in contact with a business consultant. Experts in the subject matter will appreciate the business needs and provide greater clarity about the business proceedings.
How Can We Help?
At Commitbiz, we are a business consulting company with over 14 years of experience in this area. We cover it all, right from company incorporation to office space. The new legislation will take steps to set up your company in the UAE, and we will be able to make the process even quicker and simpler for you.
Get in touch with us today - we’d be happy to assist you.
Can I own 100% of the company in the Dubai mainland?
What are some of the businesses that allow 100% ownership?
Certain construction, trading, media distribution, food businesses and more than 1000 commercial and industrial companies can be allowed 100% ownership.
How much can a joint-stock company sell its shares through IPO?
70% of the shares can be sold.
Can an Expat be on the board of directors of a mainland company in UAE?
Can an established company change to 100% ownership?
Yes, the company can reconsider the arrangements.