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Learn About UAE Laws
A Legal System that Enhances Investment Environment
The UAE has advanced set of laws that align with the national investment directives including well-established legislative structures that aim to attract foreign investment. The Commercial Companies Law of 2020 is a qualitative leap in legal legislation encouraging investment and business establishment, granting foreign investors the ability to establish companies and have full ownership of their companies. Investment opportunities are offered in all economic sectors and activities, with the exception of activities with a strategic impact.
Attracting Foreign Investments
Commercial Companies Law Enhances Open Business Environment
Federal Law No. (26) of 2020 regulates company activities in the UAE and amends certain provisions of Federal Law No. (2) of 2015 on commercial companies. It is considered a significant step taken by the UAE towards developing its national economy and strengthening it to reach new levels of excellence and leadership, in addition to adopting new models of economic development that are aligned with its futuristic vision. The law seeks to enhance the open business environment, boost ability to attract foreign investments in new economic sectors, diversify the economic base, increase the contribution of non-oil sectors to GDP, create new employment opportunities, drive market growth, localise technologies, and develop human talent and resources.
Key Benefits Granted to Foreign Investors by Federal Law No (26) of 2020 Amending the Commercial Companies Law
Companies and investors of various nationalities can get full ownership in all economic sectors, including industry, agriculture, services and others, except for some activities with a strategic impact.
The introduction of a partner or a number of partners, the transfer of a company ownership, change of the legal form of the company, merger and acquisition, liquidation.
Restructuring of the company is allowed if the company’s board of directors recommends continuing with the company's activity in light of the company's accumulated losses amounting to half of its issued capital.
There is no maximum limit for number of shareholders in private shareholding companies.
The board of directors shall invite the general assembly to convene at the request of one or more shareholders who own at least 10% of the company's shares instead of 20%, and the assembly shall be held within a period not exceeding (30) days from the date of the announcement of the meeting.
Financial institutions are not subject to the control and supervision of the Central Bank from the prohibition of extending loans to members of the board of directors of a joint stock company.
The approval of the Securities and Commodities Authority is not required to amend the Memorandum of Association or the Articles of Association of the Public Shareholding Company. The company must provide the competent authority with a copy of the decision to amend the Memorandum of Association or its Articles of Association.
All members of the board of directors of a joint-stock company may be experienced non-shareholders without a maximum limit.
It is not required that the chairman and the majority of the members of the board of directors should be Emirati citizens, which gives the foreign investor the right to control the entire membership of the board of directors of joint-stock companies unless a decision is issued by the Council of Ministers or by the competent authority stipulating otherwise.
The public shareholding company may pay any increase in the issued capital within 3 years from the date of the decision to increase, provided that the entire previous issued capital has been paid before the increase decision was issued.
Any partner in the Limited Liability Company has the right to obtain an urgent judgement from the court to increase the capital to the extent necessary to save the company from liquidation in the event that it does not have sufficient liquidity to pay the debts of the company.
It is permissible to hold the general assembly meetings of the limited liability company and vote on its decisions remotely.
There is no minimum capital for limited liability companies unless a decision is issued by the Council of Ministers specifying this or according to what is specified by the Articles of Association and the Articles of Association of the company.
The freedom to choose methods of resolving disputes between partners by specifying these methods within the company's articles of incorporation.
The name of (a limited liability company - a single person company) should not be associated with the name of its owner.
Investors can engage in banking and insurance businesses other than public joint-stock companies, as the laws and decisions issued regulating these activities have permitted this.
Investors of various nationalities may own and partake in managing companies engaged in strategic activities, provided that they comply with licensing guidelines issued by the UAE Cabinet, in addition to the authorities of competent entities with regards to approving the requests of incorporation, specifying the contribution of nationals in company capital or boards of directors. This is in addition to identifying the fees related to licensing. The UAE Cabinet may – pursuant to a request made by the Ministry of Economy, relevant entity or competent authority – exempt any company regulating its activities in accordance with special legislations, from any requirement or provision pertaining to the percentage ownership of nationals or their management of any such company.
Investors can get full ownership in all the legal forms mentioned in the Commercial Companies Law, namely public shareholding companies, private shareholding companies, limited liability companies, limited partnerships and partnership companies.