100% foreign ownership on UAE mainland effective from June 1st

Lavin Nalinababu, Business Consultancy

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Email:- dubai@hlbhamt.com

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    News regarding complete ownership to foreign nationals on UAE mainland has been circulating for a while now. Even though investors and entrepreneurs had embraced the amendment wholeheartedly, there wasn’t much clarity on the sectors that will be included and the date of commencement. Now, the UAE government has released the full list of 122 categories for 100 percent ownership in the mainland under the Foreign Direct Investment (FDI) Law and this will come into effect from June 1st, 2021.

    The positive list of categories for which complete ownership will be allowed include key sectors such as agriculture; manufacturing; transport and storage; hospitality and food services; information and communications; science and technology; healthcare; education; art and entertainment; and construction. For some categories, complete ownership will be permitted on fulfilling certain criteria.

    Until now, a foreign investor was permitted to own maximum of 49% shares and at least 51 percent of the shares should be owned by the local sponsor.

    “Complete ownership of business to foreign nationals on UAE mainland is undoubtedly a landmark decision by the government. Foreign investors had to restrict their business operations within the free zones if they wanted 100% ownership and this has pulled back many from investing in the country. With the latest amendment, more foreign nationals will start establishing their business in UAE, which will enhance the country’s position as a leading business destination. Investors are also spared from the task of looking for a local sponsor. Also, the new rule will attract more exhibitors to the country during Expo 2020”, says Jay Krishan, Partner, Business Consultancy at HLB HAMT.

    Please find below the list of activities for which the new rule will be applicable;

    Agriculture sector

    ISIC4Business activityMinimum CapitalConditions and controls for foreign direct investment
    101111Grain cultivation (wheat, corn, barley, etc.)– use of modern technology

    – achievement of high added value

    – contribution in the research and development field

    – satisfaction of the requirements of the licensing entities in the state

    201112Cultivation of bean crops
    30113Cultivation of vegetables, melons, roots, and tubers
    40114Cultivation of sugar cane
    50116Cultivation of fiber crops
    60119001Flowers and Flower Buds Cultivation
    70121Growing of grapes
    80123001Fruits and Citrus Cultivation
    90124Growing of pome fruits and stone fruits
    100125Growing of other tree and bush fruits and nuts
    110126Growing of oleaginous fruits
    120127Growing of beverage crops
    1301289Growing of aromatic, drug and pharmaceutical crops
    140161Support activities for crop production10
    150162Support activities for animal production
    160163Post-harvest crop activities
    170164Seed processing for propagation
    180210Silviculture and other forestry activities
    190240Support services to forestry

     

    Manufacturing sector

    ISIC4Business activityMinimum CapitalConditions and controls for foreign direct investment
    2010Manufacture of food products (except):

    1071- Manufacture of bakery products

    105 – Manufacture of dairy products

    Cultivation of fiber crops108 – Manufacture of prepared animal feeds

    15– use of modern technology

    – achievement of high added value

    – contribution in the research and development field

    – satisfaction of the requirements of the licensing entities in the state

    2110Manufacture of beverages (except):

    1101 -Distilling, rectifying, and blending of spirits

    1102 -Manufacture of wines

    1103- Manufacture of malt liquors and malt

    15
    2214Manufacture of wearing apparel (except):

    14109 – Tailoring and Sewing of Wearing Apparel

    1410122 – Military Garments Manufacturing

    15
    2315Manufacture of leather and related products15
    2416Manufacture of wood and of products of wood and cork, except furniture; manufacture of articles of straw and plaiting materials15
    252012002Straight or Complex Fertilizers Manufacturing15
    262013Manufacture of plastics and synthetic rubber in primary forms15
    272021Manufacture of pesticides and other agrochemical products15
    282022Manufacture of paints, varnishes, and similar coatings, printing ink and mastics15
    292023Manufacture of soap and detergents, cleaning and polishing preparations, perfumes, and toilet preparations15
    302029006Glues and Prepared Adhesives Manufacturing15
    312029008Manufacture of dyestuffs and pigments15
    322029009Textiles and Leather Finishing Used Chemical Materials Manufacturing15
    332029013Manufacture of photographic plates, films15
    342029019

    Gelatine and Its Derivatives Manufacturing

    15– use of modern technology

    – achievement of high added value

    – contribution in the research and development field

    – satisfaction of the requirements of the licensing entities in the state

    352029021Essential Oils Manufacturing (Essence)15
    362029022Extracted Natural Aromatic Products Manufacturing15
    372029023Aromatic Distilled Waters Manufacturing15
    382029024Matches Manufacturing15
    392029025Welding Powders and Pastes Manufacturing15
    402030Manufacture of man-made fibres15
    412100Manufacture of pharmaceuticals, medicinal chemical and botanical products15
    4222Manufacture of rubber and plastics products15
    4323Manufacture of other non-metallic mineral products15
    4424Manufacture of basic metals (except):

    242 Manufacture of basic precious and other non-ferrous metals

    2432 Casting of non-ferrous metals

    20
    4525Manufacture of fabricated metal products, except machinery and equipment (except)

    2529 Manufacture of weapons and ammunition

    15
    4626Manufacture of computer, electronic and optical products15
    4727Manufacture of electrical equipment20
    4828Manufacture of machinery and equipment n.e.c. (except)

    28259 Tobacco Processing Machinery Manufacturing

    100
    4929Manufacture of motor vehicles, trailers, and semi-trailers100
    503011101Building of Commercial Vessels100
    513011103Ships and Floating Structures Sections Manufacturing100
    523011905Construction of Drilling Platforms, Floating or Submersible100
    533011906Construction of Floating Structures100
    543011907Building of Hovercraft100
    553012Building of pleasure and sporting boats15
    563020Manufacture of railway locomotives and rolling stock20
    573030Manufacture of air and spacecraft and related machinery (except):

    3030006 Military Ballistic and Guided Missiles Manufacturing

    100
    583090Manufacture of transport equipment n.e.c.20
    5931Manufacture of furniture15
    603220Manufacture of musical instruments2
    613230Manufacture of sports goods3
    623240Manufacture of games and toys3
    633250Manufacture of medical and dental instruments and supplies20
    643290Other manufacturing n.e.c.3
    653312001Repair and maintenance of train engines15
    663312002Repair and maintenance of engines ship15
    673315001Repair and maintenance of ships15
    683315004Repair and maintenance of trains and railway equipment15
    693315005Maintenance and Repair of Aircrafts Engines15
    703315006Repair and maintenance of aircraft15

     

    Service sector

    ISIC4Business activityMinimum CapitalConditions and controls for foreign direct investment
    716910002Legal Consultancy OfficesAs per the applicable regulations– Not to advocate before the UAE courts.

    – Not to carry out any judicial procedure before courts, arbitral tribunals, and judicial and administrative committees.

    – Not to carry out attestation activities

    – To obtain the approval of the relevant entities in charge of licensing such activities in the State

    – To be a natural or legal person known for its excellence in this field

    72692Accounting, bookkeeping, and auditing activities; tax consultancyAs per the applicable regulationsOnly permissible for tax planning for businesses and consultancies, preparing and reviewing taxes on businesses
    73711Architectural and engineering activities and related technical consultancyAs per the applicable regulations

    To be a natural or legal person known for its excellence in this field

    74862Medical and dental practice activities
    7575Veterinary activities
    76620Computer programming, consultancy, and related activitiesAs per the applicable regulationsTo provide a technical team of no less than 5 specialized programmers by the end of the first year of the company
    7772Scientific research and developmentAs per the applicable regulationsAs per the applicable regulations
    787730-77300Renting and leasing of other machinery, equipment, and tangible goods
    79471Retail l sale in non-specialized stores (except Cooperative Societies 4711001)
    80731Advertising
    81732Market research and public opinion polling
    82702Management consultancy activities
    83712Technical testing and analysis
    84331Repair of fabricated metal products, machinery, and equipment (except ships or aircraft and other transport equipment)
    858121-81210General cleaning of buildings
    86742Photographic activities
    878292-82920Packaging activities
    88823Organization of conventions and trade shows
    89741Specialized design activities
    907490005Legal Translation Services
    917490006Translation services, movies, and television programs
    927490012Translation Publications Services
    938299002Translation Services
    9441Construction of buildingsAs per the applicable regulationsOnly permissible for large-scale infrastructure projects such as airports, highway roads, sports facilities and projects whose value exceed AED 450,000,000
    9542Civil engineering
    96432Electrical, plumbing, and other construction installation activities
    97433Building completion and finishing
    98431Demolition and site preparation
    99439Other specialized construction activities
    1007730009Construction and Building or Demolition Machines and Equipment Renting
    101851Pre-primary and primary educationAs per the applicable regulations
    1. Public education excluded.
    2. To obtain the approval from the entities in charge of education to license such activities and to comply with such standards and controls as may be determined by them.
    3. To comply with the conditions and standards of school facilities and to ensure a high level of education quality
    102852Secondary education
    103853Higher education
    104854Other education
    105370SewerageAs per the applicable regulationsAs per the applicable regulations in this regard
    106382Waste treatment and disposal
    1073900001Pollution Consequences Treatment and Environment Protection
    108861Hospital activities100
    1. Subject to the approval of the relevant authorities in light of the economic need taking into account the number of hospitals, medical and health centers in a specific area.
    2. Dubai Healthcare City is excluded from the above condition.
    109869Other human health activities70As per the applicable regulations
    1108211001Hotel ManagementAs per the applicable regulations
    1118211004Restaurants Management
    11290009Creative activities and presentation of art drama (theater)Permissible only for theater activities and live bands

    As per the applicable regulations

    1139000104Music Band
    1149000110Circus
    1158130002landscape and gardening services
    1169103-91030Botanical and zoological gardens and nature reserves activitiesPermissible only for public garden services and specialized garden services.
    1175012-50120Sea and coastal freight water transportAs per the applicable regulations
    1185022001Internal Water Transportation of Goods
    1197730016Commercial Ships Rental
    1205222002Ship Piloting and Towing
    1215222007Marine towing of boats and jet sk
    122NewActivities of holding companies in intellectual property

    HLB HAMT has been helping diverse businesses setup their companies in UAE, irrespective of the jurisdiction. We will take care of the entire incorporation process; right from assisting you choose the best location to starting the operations of the firm.

     

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