Need to Know: UAE’s Updated Commercial Companies Law for 2021

UAE’s Updated Commercial Companies Law

The United Arab Emirates are driving the world’s Fourth Industrial Revolution. The UAE’s Ministry of Economy made a series of rapid changes to boost its business landscape to new heights.

Everyone in the UAE will benefit from these updated federal law business regulations. The largest of these changes is that the UAE now allows foreign direct investment and total foreign company ownership by foreigners.

In a nutshell, what the updated laws mean for you and me, is that it is now even easier to start a business in the UAE than ever before. You’ll be able to operate a Limited Liability Company in the UAE just as a UAE national would be able to. To take full advantage of the changes, you’ll need the support of a local service agent and expert. Starting your own business here is incredibly straightforward, provided you work with a local expert in business law such as Trade License Zone, that is.

Here’s everything you need to know about the updated business laws to start a business in Dubai as a foreigner under the updated Commercial Companies Law of 2021.

Transforming Business and Inspiring Growth in UAE

From 1 June 2021, it became possible for foreigners to start a business in Dubai as a 100 percent foreigner owned enterprise on the UAE mainland. This is the first of such changes in the history of the UAE.

Previously, the Commercial Companies Law (CCL) required that all businesses here carry a minimum UAE ownership of 51 percent and in most cases operate a branch or representative office only. Decree Law No. 26 of 2020 updated this to allow an entrepreneur, startup, and foreign company operating here to gain 100 percent ownership.

This move signals a new era for the business sector in the UAE and the wider Middle East.

Developing Deeper Investment in UAE

The Department of Economic Development in Dubai (Dubai DED) offered insight into the changes for entrepreneurs, foreigner-owned startups and such companies. This updated business law affects more than 1,000 commercial and industrial activities. And, Trade License Zone will help you restructure your business while providing guidance and help throughout the process.

Another significant change to the business laws is that wholly owned companies by foreign investors will no longer be subjected to additional licensing fees and certain capital requirements. Foreign ownership doesn’t mean a branch office – but the law stipulates that full foreign ownership. Here at Trade License Zone, we’ve already helped many, many of our clients with these latest changes.

We must note that this updated law doesn’t include economic activities identified by the UAE government as “key sectors.” Those are mostly for government-aligned business activities through a joint venture structure set up for the public sector.

How to do business in Dubai has transformed with these law updates. However, startups and businesses still require specific business licenses to conduct business in the UAE and internationally.

If you currently own a business and it has a UAE partner in a joint venture, it doesn’t mean that this 51 percent UAE shareholding will immediately be dropped. Business owners will need to reduce their UAE partner’s ownership percentage according to legal processes outlined by the UAE Ministry. Don’t worry: here at Trade License Zone, we’ll walk you through those.

The Dubai DED has also changed how foreign companies based offshore operate a branch office or representative office in the UAE. These types of companies won’t need to appoint a UAE national service agent (known here as a local sponsor or a local service agent).

Now such branch offices can be wholly owned by foreign companies. This brings additional cost savings for foreign investors. The company’s head office can be set up in the UAE now, too.

The Decree by the Economic Department also allows for an increase in the cap on shares that a company can float on one of the UAE’s stock markets, from 30 percent to 70 percent.

A major change under the updated law is that foreigner-owned companies can now purchase property—commercial and residential – just as a UAE national could.

These changes make the UAE now an even more attractive option for foreign investment. The business landscape is more sustainable and profitable for foreign investors, startups and entrepreneurs with a more diverse and stable economy.

Investors’ Impact and Effect: 2021 and Beyond

One of the best aspects of living and working in the UAE is that the country takes 0% tax for personal income taxes or corporate taxes on revenues. The state subsidizes education, health and fuel. It also provides an excellent infrastructure of roads, ports, and airports to make doing business in the Middle East, Africa, Europe, and beyond, so very easy. East meets West in the UAE!

Investing in the UAE will soar with entrepreneurs and families able to wholly own their businesses and property here.

The government’s not stopped their updates there, though. They have also changed visas, residence permits, investment incentives, and undated the business licensing department structures.

Here at Trade License Zone, we’ll help you with every aspect of your move to the UAE, getting your business setup, your visa and business license applications, and more.

Culture of Innovation and Investment in UAE

The UAE hasn’t been shy about promoting its Fourth Industrial Revolution strategy. That means they’re plowing billions of dollars into companies and their economy. They’re now the world’s biggest employer of scientific and technical skills.

Human capital is—and has always been—at the core of Dubai’s drive for business growth. It attracts talented individuals from around the world. In fact, over 90-percent of the national workforce here is made up of highly skilled foreigners. And, the UAE is the second-highest ranked youth and graduate employer in the world.

Dubai is also ranked first in technology employment in the world, first in cyber-security, and first for internet users in the world. Industry, real estate, additional support services, and business activity are growing exponentially.

There is a culture of innovation here that’s hard to ignore. Dubai has grown into a hotbed of tech companies and startups. Even Microsoft and Oracle have set up regional cloud data centers in Dubai for the UAE market.

Small businesses create over 52 percent of the UAE’s GDP of non-oil income in Dubai. Our economy’s been ranked as the eighth most diverse in the world. The growth and scope of opportunity in the UAE are enormous.

Economists have long considered the UAE stable and ripe for investment. Today, it is the fourth largest investment hub in the world. And, the latest law changes will push this region higher up that chart in the coming years.

Making the right applications for the right business structure for your startup (such as a sole proprietorship) is key to taking advantage of these updated business laws. Trade License Zone’s local support and expert advice will help you maximize the benefits of the several regulations available to entrepreneurs and startups.

Business Startup in UAE

Setting up a business in the United Arab Emirates is both easy and affordable. The cost of registering a company here will depend on the type and size of your business. However, if you wish to start up on a budget, it is certainly doable too.

Be warned, however: while the application process isn’t difficult, it requires an expert eye. Any errors in your application could lead to it being delayed or rejected. That’s why it’s often a good idea to work with a company setup specialist to help you establish your business as a lawful activity.

That’s what Trade License Zone does best. All you need to provide is some basic documentation and a little information about the nature of your business. Then, sit back and let the experts take care of the rest. We’ll manage your license and visa applications, communicate with the relevant free zone authority and report back when you’re ready to trade.