The UAE has brought major amendments, which will allow entrepreneurs and foreign investors to own their businesses without a national sponsor. The UAE's President His Highness Sheikh Khalifa bin Zayed Al Nahyan issued the decree amending the Companies Act, which will come into effect on December 1st of the year.
The amended Foreign Direct Investment (FDI) law includes restructuring of certain provisions and rules of companies with limited liability and contribution. The existing FDI law was adopted in September 2018 through Federal Legislative Decree No 19 of 2018 and amended Commercial Companies Law (CCL) No 2 of 2015. The existing CCL restricts foreign shareholders to own 49 per cent maximum in an LLC (limited liability company) and demands a national or 100 per cent locally owned company to own the remaining 51 per cent share as a local sponsor.
The abolition of a state-owned agent in foreign companies comes as an effort to strengthen its regional and global status as an attractive destination for businesses.
The amendments allow companies to remove any higher-ups from their positions if they have committed fraudulent acts or abuse of power. The shareholders can jointly sue any company associated party in case of damages caused to the firm. The revised law also permits electronic voting in the general assembly meetings with certain conditions issued by the authority.
The law also specifies that a firm wishing to change into a public joint-stock company after authority approval can sell no more than 70 per cent of the company's capital, instead of the current 30 per cent through an initial public offering (IPO).