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The UAE mainland is any place in the territory of the emirate, except for the five recognised free zones.
A company registered on the mainland can perform activities across the entirety of the UAE. This includes conducting business with federal and local governmental bodies without the involvement of a local commercial agent or national agent.
Companies setting up on the mainland can choose between two options:
1. An ‘Onshore’ Limited Liability Company (LLC) established pursuant to the new UAE Companies Law, which during 2021 will start to permit foreign investors to hold up to 100% of the legal interest in such LLCs incorporated ‘onshore’.
The new UAE Companies Law (comprising amendments to the UAE Commercial Companies Law No. 2 of 2015) removes the specific requirement that a minimum of 51% of the shareholding in onshore entities be held by UAE nationals (cancelling the old FDI positive list in place since 2018). New thresholds for UAE ownership (if any) will be determined by the UAE Federal Cabinet, following recommendations from an inter- emirate committee (comprising members of a number of governmental departments from each emirate). The committee was established to propose which economic activities/sectors shall permit 100% foreign investor ownership and which economic activities/sectors are of a ‘strategic impact’ such that 100% foreign ownership will not be permitted.
Market participants in the UAE expect that in the first half of 2021, the relevant authorities will circulate further details about the activities deemed to have a ‘strategic impact’; and other emirate-by-emirate implementation measures, so that all stakeholders (and foreign investors) will have further clarity on how this major change in UAE corporate governance will be implemented going forward.
2. A joint-venture partnership with local investors
Amendments to UAE Federal Law No 2 on 23rd November 2020, annuls the requirement for commercial companies to have a major Emirati shareholder of agent, providing full foreign ownership of onshore companies.
Under the new amendments, businesses can now be established by non Emiratis of all nationalities from 2nd January 2021, with the following exceptions:
Certain specified sectors, including oil and gas exploration, utilities and transport
Companies that are precluded from direct foreign ownership by virtue of UAE Cabinet decision
Companies that are wholly owned by federal or local government or their subsidiaries
These changes are proposed to extend to branches of foreign companies which will no longer require a local registered agent.
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