The United Arab Emirates has taken a significant step toward strengthening its position as a global business hub by introducing major reforms in company ownership laws. One of the most impactful changes is the removal of the mandatory local sponsor requirement for many business activities, allowing foreign investors to enjoy up to 100% ownership in selected sectors.
This development has transformed the business landscape in the UAE, making it more attractive and accessible for international entrepreneurs, startups, and investors. With greater control, flexibility, and profit retention, foreign investors can now establish and expand their businesses with more confidence than ever before.
100% Foreign Ownership in UAE: No Local Sponsor Required
As per United Arab Emirates Cabinet Resolution No. 16 of 2020, it has been resolved that hundred percent (100%) ownership for foreign investors are now allowed for some classes of business.
Formerly under the law , if you want to set up business outside free zone it requires an Emirati individual or hundred percent (100%) Emirati-owned company to hold the balance fifty-one (51 %) shares as a local sponsor, and foreign investors were restricted to owning up to forty nine percent (49 %) shares only.
The amended law allows natural and legal person to establish companies without the need for a for local sponsors, however such pronouncement is subject for certain restrictions.
Among the Parameters set forth under the Cabinet Resolution No.16 of 2020 allowing hundred percent (100%) ownership for foreign investors of Foreign Direct Investment project in the economic activities are:
- Approved list (“called the positive list”) of economic sectors and activities under which a foreign investor may engaged in;
- Allowed legal forms required for the economic activities;
- A limited liability Companies, including one person ( single owner) companies;
- Private joint Stock companies, including one person ( single owner) companies.
- Minimum Share Capital in the economic activities depends on the specific activities;
- Restrictions and Conditions of Foreign Investment;
- Minimum percentage of Nationals;
- shall be according to the relevant Regulation applicable in the Ministry of Human Resource & Emiratization.
- Exceptions and among others.
- Provisions of Article (71), (151) and (209) of the Federal Law No. (2) of 2015 on the Commercial Companies and its amendments shall not apply to Foreign Direct Investment Project in economic activities referred to in the as the ‘Positive list’ approved list.
Primarily, the amended law set forth more emphasis for the investors who desires to have local business a limited liability shareholding which is distinct from the free zone business set up wherein the latter hundred percent ownership is acquired since each free zone govern by its own authorities.
Expectedly with the inviting business provisions in establishing companies with limited liability shareholdings, various investors will be more willing to set up business under such forms.
Key Benefits of 100% Foreign Ownership in UAE
The introduction of 100% foreign ownership has provided significant advantages for international investors and entrepreneurs planning to establish businesses in the UAE mainland. Previously, many foreign investors had concerns regarding ownership structure, profit distribution, and operational control due to the local sponsor requirement.
With the revised regulations, eligible business owners can now enjoy:
- Full ownership and control over their company operations;
- Complete access to business profits and financial decision-making;
- Greater flexibility in expanding or restructuring the business;
- Increased investor confidence and long-term business security;
- Easier access to international partnerships and foreign investments;
- Improved transparency in corporate governance and management.
The reform has also strengthened the UAE’s reputation as a competitive global investment destination by creating a more business-friendly environment for startups, SMEs, and multinational companies alike.
For many investors, this change has simplified the process of establishing a mainland company while offering advantages that were previously associated mainly with free zone business setups.
On the other hand, the amended law will not generally apply to all kind of business license the determination will depends particularly on the business activity to be undertaken by the foreign investor. Hence, in order to be entitled to the duly promulgated resolution foreign investor has to take into considerations all the consequential provisions of the law.
Foreign Investor has been defined Under Article 1 of the Cabinet Resolution No. 16 of 2020 “means a natural or moral person who has not the UAE national nationality and invests in the State in accordance with the Federal Law No. ( 19 ) of 2018 on Foreign Direct Investment".
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Conclusion
The introduction of 100% foreign ownership marks a major shift in the UAE’s business landscape, making it more attractive for global investors. While the opportunity is significant, understanding the applicable activities, legal structures, and compliance requirements is essential.
With the right approach and professional support, investors can fully leverage this reform and establish a strong business presence in the UAE.
FAQs
1. What does 100% foreign ownership mean in the UAE?
It means foreign investors can fully own and operate a mainland UAE business without needing a local Emirati partner or sponsor to hold 51% of the shares. This change was introduced through Cabinet Resolution No. 16 of 2020 and applies to eligible business activities listed in the approved positive list.
2. Does 100% foreign ownership apply to all business activities in the UAE?
No. The law applies only to business activities included in the approved positive list under Cabinet Resolution No. 16 of 2020. Activities outside this list may still require a local partner or service agent. It is important to verify whether your specific business activity qualifies before proceeding with company formation.
3. What is the difference between 100% foreign ownership on the mainland and in a free zone?
Free zones have always allowed 100% foreign ownership since each free zone operates under its own regulatory authority. The 2020 reform extended this benefit to selected mainland business activities, giving foreign investors more flexibility to choose between mainland and free zone setups based on their operational and market access requirements.
