Foreign investors who, for many years, eagerly awaited the ability to establish majority or wholly owned businesses in the United Arab Emirates (“UAE”) outside the free zones can prepare their bait—but cannot go fishing yet.
Following an announcement made by the UAE Council of Ministers earlier this year, the long-awaited Foreign Direct Investment Law was issued in September 2018 through federal Legislative Decree No. 19 of 2018 (the “Foreign Direct Investment Law”). While not repealing the restrictions on foreign ownership under the federal Commercial Companies Law No. 2 of 2015 (the “Commercial Companies Law”), the Foreign Direct Investment Law sets forth a framework entitling foreign investors to apply for a special status for their UAE-based investment vehicles that would accord them certain derogations from the provisions of the Commercial Companies Law, including in relation to the limit on foreign ownership. The new law does not relax foreign ownership limitations across the board.
In the memorandum, we summarize the key provisions introduced by the new Foreign Direct Investment Law and analyze the potential impact on the investment landscape in the UAE.