Here’s Why Investing In Dubai Should Be Part of Your 2021 Investment Strategy

Investing in Dubai: Benefits That You Need to Know About

As we enter 2021 there are exciting law amendments that take the United Arab Emirates (UAE) to levels that have never been seen previously. A recent amendment to laws that previously placing restrictions on the foreign ownership of businesses in the UAE has opened up almost limitless possibilities in Dubai. The new rule, which went into effect on December 1, 2020, is able to be applied to at least 122 business activities.

Previous Requirements

The Commercial Companies Law (CCL) No. 2 was passed in 2015. It required that an Emirati citizen hold at least a 51 percent interest in the business and be its sponsor. As an alternative, the company could also have been owned only by Emiratis.

With over 80 percent of the UAE's population being born outside of the region, the previous business ownership regulations made it almost impossible for them to own a company. Another stumbling block were the considerable costs that setting up a foreign-owned company required so that it would still meet the legal requirements.

Foreign Direct Investment Law

These exciting new changes are known as the Foreign Direct Investment Law. As a result of this new law, foreign investors in Dubai will not need an Emirati sponsor. Foreign investors must have at least 51 percent of the shareholder rights in order to qualify. These businesses can be either a limited liability company or a private joint stock company. Both of these options can be a business with a single owner, greatly increasing the options for foreign investors.

Business Sectors Involved

The Foreign Direct Investment law has released a list of 122 acceptable economic activities that foreign investors can take advantage of. These activities involve a number of different sectors.

The following are just a few examples of the many possibilities:
  • Agricultural such as seed cultivation, the growing of grapes, activities that support crop production, seed processing to propagation, and more.
  • Manufacturing such as wood and wood products, beverages, bakery products, paints and other diverse activities.
  • Services like legal consultancy, computer programming, consulting and other activities, advertising, trade show and convention organization and many more.

Easing of Old Restrictions

With the new business investment rules in place, local Dubai authorities can approve applications who are eager to establish a business. There are exceptions when it comes to a joint stock company. Local authorities can also assist foreign investors by specifying targets such as boards of directors and capital allocation for Emiratis.

Before the CCL was modified, joint stock companies could only sell 30 percent of their stocks through their initial public offerings (IPOs). After going into effect on December 1, 2020, the Foreign Direct Investment law now allows these companies to sell up to 70 percent, increasing the possibilities of diversification.

The previous restrictions made it both cumbersome and expensive for foreigners to invest in UAE companies. Now, however, a diverse roster of investment opportunities awaits. Investors who are interested in taking advantage of such an opportunity should be prepared to tap into them as soon as possible.