The 100% Foreign Ownership Rule in UAE
In 2020, there was a Presidential Decree that amended the UAE Commercial Companies Law, removing the local sponsor requirement for foreign entrepreneurs looking to set up a business in the country.
Before this law was introduced, mainland companies owned by foreigners were required to have a local Emirati sponsor who would own 51% of the business. Free zones were the only place foreigners could have complete business ownership.
This law, which was enacted from June 2021, did come with some caveats. Certain activities for Dubai mainland company setup will still need a local sponsor:
- Security & defense, military activities
- Telecommunications
- Banking
- Insurance
- Finance
- Exchange
- Banknote/coin production
- Hajj & Umrah organizing
- Fish, marine animals, pearl catching
Additionally, expats were now allowed to chair company meetings and serve on boards of directors. These changes were highly beneficial for Dubai LLC company formation as it allowed more entrepreneurs to set up businesses in the Emirate while protecting their personal assets.
Once the ownership rule was enacted in 2021, businesses were given one year to comply with the law. At that time, existing companies who wanted complete foreign ownership were required to modify their Memorandum of Association and get approval from the local sponsor to get back the company shares. If the sponsor refused to give up the shares, legal proceedings or arbitration could be enacted.
Advantages of Setting up an LLC in Dubai
There are many legal structure options entrepreneurs can choose for company formation in Dubai:
- Partnership
- Civil company
- Branch company
- Sole establishment
However, there are multiple benefits of choosing to set up an LLC on the Dubai mainland.
1. 100% Control and Ownership
2. Access to the UAE Local Market
Unlike free zone companies, LLCs can trade anywhere in the UAE and international market without any restrictions. They can also engage with government and semi-government projects. This is a massive benefit in the free zone vs mainland Dubai debate.
3. Full Profit and Capital Retention
4. Protected Personal Liability
5. Visa and Residency Benefits
LLC owners can apply for residency visas for themselves, their dependents, and any of their employees. If you’re an LLC owner who has invested over AED 2 million in the UAE, you can apply for the Dubai investor visa which gives you a 10-year residency without a sponsor in the country.
How can LLCs Get 100% Foreign Ownership in Dubai & UAE?
This is how LLC companies can get 100% foreign ownership in the UAE. Working with a business setup consultant from A&A Associate can streamline the process.
- Choose a business activity: You can choose from over 2,500 business activities in the UAE. As long as you don’t pick an activity that requires sponsorship, you will have full ownership of your business.
- Register a trade name: You’ll need to register a business name that explains your business services and follow the UAE’s trade name regulations.
- Prepare a Memorandum of Association: You’ll need to prepare a Memorandum and Articles of Association for your business. You will also need a Certificate of Incorporation.
- Get a trade license: Once you get initial approval from the authorities, you can apply for a trade license. The Dubai license cost will be based on your business activity, number of employees, and your office location.
- Open a bank account: It is mandatory for every UAE business to have a separate bank account for business transactions. A business setup consultant will be able to help you easily open a bank account.
Form an LLC and Start Your Dubai Business With A&A Associate
Business setup in Dubai becomes a simplified process with A&A Associate’s expert consultants. As the UAE’s largest business setup advisory, we can help you through the entire LLC formation process, from getting initial approvals, applying for a trade license, and opening a bank account. Get in touch for a free consultation!
