UAE REMOVES THE NEED FOR MAJORITY EMIRATI SHAREHOLDER IN ONSHORE COMPANIES

The UAE has announced changes to Federal Law No. 2 of 2015 relating to Commercial Companies (the “Commercial Companies Law”), removing the need in an onshore company to have the majority of the equity capital owned by a UAE national.

This marks a fundamental change on how business is conducted in the UAE, effectively allowing expatriate investors to own 100% of an onshore company in the UAE.
The changes took effect as early as December 1, 2020.
The key changes introduced include the following:

• There will no longer be a need to have an Emirati national as a majority shareholder (51%) in onshore companies, nor will they need to have a UAE national or local company as its registered agent.
• Numerous articles of the Commercial Companies Law are to be amended to facilitate the changes and new articles will be added. Most of the changes are expected to relate to limited liability companies (LLCs) and joint stock companies.
• The changes will not be applicable to strategically important sectors, such as oil and gas exploration, utilities and transport, as well as to state-owned entities.
• Federal Law by Decree No. 19 of 2018 regarding Foreign Direct Investment (the “FDI Law”) is expected to be superseded by these changes, hence, the FDI Law is expected to be repealed.

Authorities are expected to release further guidelines, which should shed more light on how the above changes will be applied in practice.

The above changes to the Commercial Companies Law will hopefully enhance the UAE’s attractiveness for investment and business growth.

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