100% Foreign Ownership of UAE Companies and Visa Extension
On Sunday, 20th May 2018, it was announced that the UAE Cabinet had passed a resolution to (i) permit 100% foreign ownership of onshore entities, and (ii) extend residency visas issued to certain investors and professionals to a period of up to 10 years. The Cabinet decision was communicated through a series of ‘Tweets’ issued from the Twitter account of His Highness Sheikh Mohammed bin Rashid Al Maktoum, however, since the announcement no further details have been officially issued and thus, at this stage, any understanding of application is purely speculative until the legal framework is published.
Reaction to the news has been sensational with both the press and UAE residents welcoming the announcement as a positive development towards greater flexibility and increased investor certainty in the UAE, however the scope of the proposed changes and the timeline to implementation is still unclear so any potential impact cannot yet be known.
100% Foreign Ownership
The existing law surrounding foreign ownership of UAE based entities restricts ownership to 49% requiring that any company incorporated in the UAE must have a national shareholder holding at least 51% of the capital. It has been suspected that the UAE national shareholding requirement for companies established onshore would be amended however, without clarity as to the type of entity that would qualify under this decision and the nature of activity it may apply to, we are not yet able to predict the impact of this decision.
Residency visas are currently issued for either a two or three year period, dependent upon the sponsor therefor. The announced extension of up to ten year’s residency being provided to investors and certain professionals and their families, as well as exceptional students, would indeed be an attractive option however, until the specifics as to the scope and application of the visa extension have been defined we are unable to determine who would qualify.
The Cabinet Decision included enforcement provision by the third quarter of 2018 and therefore further information is expected to be forthcoming around August of this year. In the interim, no changes to the existing framework have occurred and therefore, until further particulars are provided we are unable to offer any further insight regarding these eagerly anticipated changes.
If you require any further information please do not hesitate to contact us.