20 Oct Investment Law 51/49 remains in UAE’s New Commercial Company Laws
The new Commercial Company Laws (CCL) of the United Arab Emirates have been issued, and the investment law 51/49 has not changed unless the company is instituted in the Free Zone. The law remained although there were many speculations and claims that the law will be eliminated. Many laws of the UAE favour the country’s nationals, and one such law is the investment law 51/49. The law states that a “UAE company” should not have less than 51 percent of its share capital owned by UAE nationals. This law, therefore, prevents foreign investors from owning more than 49 percent of a UAE company excluding those incorporated in the Free Zone.
Foreigners cannot own more than 49 percent in any UAE company other than the ones incorporated in special free zones. The UAE commercial company law has maintained the mandatory requirement of national ownership of not less than 51 per cent of any company that is established in the UAE. Relaxation of this requirement was the subject of many calls within the business community, particularly that it is not a secret that the vast majority of the companies are not adhering to this requirement.
There are variations in ownership restrictions for a number of sectors and circumstances.
Such sectors include:
- Insurance sector – foreign ownership is limited to 25 percent
- Financial services sector – foreign ownership is restricted to 40 percent
- Real estate sector – No foreign ownership is permitted in certain circumstances
- Commercial agencies – Foreign ownership is not allowed by any means
The 100% foreign ownership allowance for special economic free zones has significantly improved the country’s economy. According to the 2010 Economic Freedom Index conducted by the Heritage Foundation, the UAE has scored a respectable 76.9, a 3.12 increase from last year. The higher score makes the country’s economy 8th freest out of 180 countries in the world. UAE has drastically improved its economic growth for the past five years (score of 69.3 in 2012, 35th world rank).