29 09 2020

100% foreign ownership of a local company in Dubai, UAE

100% foreign ownership of a local company in Dubai, UAE

1- What organizational legal forms are available?

If you would like, as a foreign investor, to own a 100% shares of the company, then it is worth considering that the company is created on the basis of the law on foreign direct investment. Therefore, the company can be registered as LLC or Private Joint Stock Company.

2- Is it necessary to hire local citizens if the company is 100% owned by a foreign citizen?

This aspect is fully regulated by the “Ministry of Human Resources and Emiratization”. Therefore, in order to find out how many local residents or what percentage of the total number of employees must be registered with a local company with full foreign ownership, it is necessary to study the relevant regulations.

3- Will there be any exceptions to the Commercial Companies Law No.2 2015?

Exceptions will appear. There is an exemption from the provisions below for fully foreign owned companies:

Article 71 - Companies registered in the form of LLC must have at least 2 partners, and the maximum number is no more than 50. The liability of the partner corresponds to his share in the company.

A company in the form of an LLC can be registered by an individual or legal entity. The person who owns the capital of the company is liable for obligations that relate directly to the company itself, only in accordance with the established capital limits, which are prescribed in the agreement of the Founder. As for the obligations that are not included in the capital, the owner is not responsible for them.

Article 151 - The Board of Directors shall be composed primarily of citizens of the United Arab Emirates. The board of directors loses its power if the ratio of board members who are citizens of the United Arab Emirates for 3 months is lower than the norm prescribed in this Article. If there is a deficit in the shares of UAE citizens in the Board of Directors, it is necessary to correct it within 3 months.

Section 209 - Only the Securities and Commodities Authority and the Articles of Association determine how and under what conditions the company's shares are disposed of. The main condition is the condition under which the share of local residents of the United Arab Emirates in the Board of Directors does not become less than the established Legal Limits.