The United Arab Emirates has relaxed and removed a range of limits on foreign ownership of companies, state-run media reported, in the country’s latest bid to boost its global status and attract foreign investors.
The overhaul announced on Monday signals yet another startling change for the federation of seven desert sheikhdoms as it grapples with the economic fallout of the pandemic.
Earlier this month, the UAE announced a series of reforms to its Islamic legal code, allowing unmarried couples to cohabitate, improving protections for women and loosening restrictions on alcohol consumption.
The dramatic changes come as the UAE has spent billions of dollars preparing to host some 25 million visitors for the World Expo, which was pushed to 2021 due to the pandemic.
The emirates are also expecting Israelis will join the legions of foreigners who have opened businesses and bought apartments in the coastal cities of Dubai and Abu Dhabi following a breakthrough US-brokered normalisation deal between the countries.
The presidential decree changing the corporate law helps the UAE “strengthen its leading position regionally and globally as an attractive destination for projects and companies”, state-run WAM news agency reported.
The reforms allow foreign entrepreneurs and investors to set up their own companies without involving local shareholders, the agency said.
That is a welcome development for the country’s many expatriates who long had their ownership capped at 49% in firms outside free zones.
Other legal amendments remove quotas requiring that Emiratis hold the majority of board positions and serve in the chair of onshore companies.
Companies that want to be publicly traded will be able to sell up to 70% of their shares instead of the current 30% limit.
The amendments will certainly diminish the appeal of 45 “free” zones across the UAE, where those wanting to avoid local-hiring quotas and retain full foreign ownership would set up shop.
But the move deals a blow to longstanding rentier benefits for Emirati citizens, many of whom made their livings as figurehead company partners.
Yet, no one expects public resistance from locals. Some 80% of Emiratis work in the public sector and receive generous salaries and subsidies.
Political parties and labour unions remain illegal.
State-linked newspaper The National reported the decree in further detail, saying the foreign ownership amendments would take effect within six months.
Companies could take an entire year to start complying with the changes, it added.