UAE Federal Law on Foreign Direct Investment
Lavin Nalinababu, Business Consultancy
The UAE government had come up with a landmark initiative last year, allowing complete ownership to foreign investors. Along with 100 percent ownership, the law also grants many incentives & competitive advantages. It is not applicable to financial and non-financial free zones.
Benefits and Guarantees
- The property won’t be confiscated unless it is for public benefit and with a fair compensation.
- Project funds won’t be seized without a court hearing.
- The licensed foreign investment firms will be treated like national firms
- Financial transfers can be made for project returns outside UAE.
- Technical, economic and financial information and investment initiatives will remain confidential.
- The right to use real estate.
- A single or numerous partners can be involved.
- Ownership can be transferred to a new investor.
- Changes can be made to the articles of association.
- The legal form of the organization can be changed.
- Can carry out merger, acquisition or liquidation.
Steps involved in licensing an FDI Project (from positive list)
- Choose the business activity of the firm
- Once you receive the initial approval, a foreign direct investment license application should be submitted.
- Reserve the trade name. An indication of the legal form of the company and the expression ‘Foreign Direct Investment (FDI)’ must follow the name of the company.
- Obtain approvals from authorities concerned
- Submit proof of submission to join Tawteen Partners Club
- Pay the fee and get approval and FDI license
- Start a bank account on behalf of the company and deposit minimum 20 percent of the capital.
The FDI capital should not be less than the specified minimum capital value.
Procedures for approving a project license application that is not specified under the positive list
- The investor need to submit the application for approval of the project license to the competent authority of foreign direct investment. The authority will submit the request to the FDI committee for consideration, which might approve or reject the application. The licensing authority and the local government in the concerned emirate will be involved in the process.
- Once the request is submitted to the FDI committee, the committee will submit a recommendation to the UAE cabinet. If the cabinet approves the request, the same will be notified to the investor via the competent authority. The investor needs to provide certain data, information and documents once the request is approved.
- The competent authority will issue approval of the license with in five working days from the date of meeting the required documents and procedures.
- If the competent authority rejects the license request, the decision will be final and not subject to appeal.
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