Have you heard about 100% foreign ownership in Dubai UAE? why do actually need it for any business setup in Dubai? the main reason that Dubai is safe for foreign investors is that the UAE constitution does not allow the federal government to interfere in the decisions of each Emirate. With this in mind, people perceive Dubai as being a good place to start a business since it has its own legislative body. In this blog post, we will give information all about 100% foreign ownership in Dubai, UAE.
What is 100% foreign ownership in Dubai?
100% Foreign Ownership is a term used to describe the ability to invest in Dubai freehold properties and other investment opportunities. The concept of 100% foreign ownership was introduced by the Government of Dubai in 2006 and has since been developed and enhanced by the Dubai Land Department (DLD). The main purpose of this policy was to attract more local and international investors into the Emirate, thereby increasing its economic output.
A 100% foreign ownership is permitted for onshore companies. and it is supposed to be a mainland company formation. The only condition is that the authorized capital of the company should be at least AED 100,000. The company must be registered with the Department of Economic Development (DED) and have a license to operate from DED.In addition to 100% foreign ownership, there are several other options for companies that have been established in Dubai: Joint ventures with local companies are permitted if the majority shareholding is held by a foreign investor. The joint venture agreement should be registered at the Dubai Chamber of Commerce and Industry (DCCI). Companies with less than 50 employees maybe 100% foreign-owned, but their shareholders must be UAE nationals. Companies with more than 50 employees must have at least 51% local participation on their board of directors.
Free zones are classified into two categories, namely Free Trade Zones (FTZs) and Special Economic Zones (SEZs). The difference between these two types of free zones is that FTZs provide full commercial freedom whereas SEZs require foreign investors to obtain an investment license from the UAE Government before operating their businesses within these areas. In both cases, foreign nationals can own 100% ownership of the business in Dubai UAE because there are no limitations on foreign ownership in free zones.
What is the process for 100% foreign ownership in Dubai?
The process of obtaining 100% foreign ownership can be lengthy and complex process. The following are the steps involved in obtaining 100% foreign ownership:
1) The interested party will first have to submit an application to the General Directorate of Residency and Foreigners Affairs (GDRFA), which will be reviewed by a committee headed by the Director General. This committee will then decide if the application will be approved or rejected. If it is approved, then an approval letter will be issued by the visa department at GDRFA, along with other documents such as a bank guarantee and personal finance report.
2) Once this approval letter has been issued, it must then be submitted to either Dubai Land Department (DLD) or Real Estate Regulatory Agency (RERA). DLD does not require any additional documents but RERA may require additional information depending on whether the applicant is applying for an individual license or corporate license.
3) Once all these requirements have been met, you can proceed with applying for your business license with the Dubai Chamber of Commerce.
How does 100% foreign ownership in UAE work?
The 100% ownership of business rules has varied from one emirate to another emirate. In Abu Dhabi, the Emirate has introduced a new rule that requires 100% ownership of the business rules to be owned by a UAE national. This means that no foreign company can own more than 51% of a company’s shares. It is 50% owned by the government and 50% private sector. Currently, this law is only applicable in Abu Dhabi and will likely be applied throughout the entire country in due course.
In Dubai, there is no such law as yet but it is expected that Dubai will follow suit with Abu Dhabi eventually. it is possible for a UAE national to hold less than 100% of a company’s shares if certain conditions are met:
- The foreign partner must be an active shareholder who does not have any passive interest in the business;
- The foreign partner must not have any control over the operations of the company;
- The foreign partner must not have any say on any financial matters or on decisions relating to managerial personnel in relation to their employment contracts; and
- The foreign partner must not be involved in any way whatsoever in management decisions or operations of the company.
In Dubai, certain businesses can be owned by foreigners. This includes general trading, Consulting services, and food businesses, and also construction industries seek 100% foreign ownership. check here for the full DED business activities list.
Benefits of having 100% foreign ownership of business:
- you can operate your business anywhere across the UAE.
- you can settle down and make the UAE your home after obtaining a long-term visa for investors.
- No need to find a local service agent or local sponsor is required.
- you need not negotiate with UAE local partners over a 51% share of the capital.
At Business Setup Dubai, we help you get your business up and running in the UAE. We’ll take care of everything from drafting the necessary contracts to getting you all the approvals and licenses you need so that your start-up can be as smooth as possible. If you have a plan to get 100% foreign ownership in Dubai, feel free to contact us for a free consultation.