ARTICLE
27 November 2018

New Foreign Direct Investment Law In The UAE

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STA Law Firm

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STA is a full practice law firm headquartered in Dubai with offices across UAE (Abu Dhabi, Dubai, Sharjah and Ras Al Khaimah) and overseas (Bahrain, Delhi, Doha, Luxembourg, Moscow, Portugal and Mumbai). We work alongside several groups of companies within the Oil and Gas, Maritime, Logistics, Real estate, Construction, Hospitality and Healthcare sectors in the region and internationally providing them with our signature bespoke and cogent legal advice. We successfully represent our clients at various courts and arbitration centers across the UAE. We are also approached by several investors internationally who wish to find suitable business partners in the region.
On 30 October 2018, Decree Law No. 19 of 2018 (the new Foreign Direct Investment (FDI) Law) was issued.
United Arab Emirates Government, Public Sector

On 30 October 2018, Decree Law No. 19 of 2018 (the new Foreign Direct Investment (FDI) Law) was issued. Under this legislation, the UAE aims to further entice foreign direct investment and bolster its investment landscape. The Decree intends to attract knowledge, innovative technology, and expand production. According to the executive chairman of the Sharjah Investment and Development Authority,

“This decree underscores the UAE’s keenness, under the leadership of President His Highness Sheikh Khalifa bin Zayed Al Nahyan to further diversify sustainable development, and cement our position on the world map as a leading foreign investment destination.”

Under the new FDI Law, the UAE Cabinet maintains authority to alter the maximum percentage of foreign ownership. Although a greater degree of ownership can be granted, the Law provides rules which must be adhered to by foreign investors who hold greater than 49 percent of company shares. The new FDI Law also permits the UAE Cabinet to modify the sectors which permit greater levels of foreign investment. In doing so, the Cabinet is capable of setting the permissible foreign ownership percentage, establish capital and Emiratization requirements, and restrict the type of operations conductible in each sector. If a foreign investor wishes to own more than 49% of a project’s shares, permission must be obtained before the project can become a Foreign Direct Investment Company.

Within the next two years it has been anticipated that as a result of the new UAE Foreign Direct Investment Law, FDI will surge by 15 to 20%. This dramatic growth is predicted to occur as a result of the relaxed foreign majority ownership rules. This speculation was presented on 19 November 2018 by a senior official from the Ministry of Economy. Although full or part ownership will be permitted within various sectors, this sanction will remain non-applicable to approximately 12 industries. Within the first quarter of 2019, companies can expect the publication of a detailed list outlining which sectors are approved for full ownership.

The projected increase in FDI is expected to primarily target projects encompassing logistics, healthcare, and tourism. Additionally, Sharjah’s free zones are anticipated to experience the bulk of investment.  

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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