United Arab Emirates (UAE) Foreign Direct Investment Law – The Positive List

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​published on 29 April 2020 | reading time approx. 2 minutes

 

The UAE Cabinet has completed the elements of the Foreign Direct Investment Law "FDI LAW" by issuing the Positive List of activities and has come into effect. This is a major development for foreign investors that are interested in investing in, or already invested in, companies in the UAE.

 

 

In September 2018, the UAE issued the Foreign Direct Investment Law (FDI Law) N'19 for the year 2018, to open up the UAE mainland market to foreign investors in several sectors of the economy. This was followed by the announcement on July 2019 of the relaxation of for-eign ownership restrictions for many business activities, specifically in the manufacturing, ag-ricultural and services categories (Positive List), pursuant to the FDI Law.

 

Under the FDI Law, foreign investment above a 49% will not be permitted in sectors of the economy which appear in a "negative list". The UAE Cabinet has discretion to amend the "negative list" by adding or removing sectors. There are currently 13 sectors specified in the "negative list", including banking, insurance, and commercial agencies.

 

On 17th of March 2020, The UAE cabinet has issued the Decision N' 16 for the year 2020, setting out the activities in which up to 100 percent foreign ownership by Foreign Investors may be permitted, subject to certain criteria being satisfied.

 

The Positive List Resolution is expressed to become effective from the day on which it is published in the Official Gazette. The Positive List Resolution has been published in the Of-ficial Gazette dated 31 March 2020 so is now in effect, and the UAE cabinet has addressed the resolution and the Positive List on 18th of March 2020 to the Ministry of Economy for applying the new resolution, as the Department of Economic Development (DED) in the respective Emirates is tasked with implementing the Resolution and imposing the various requirements.

 

The Resolution N'16 determined the forms of companies which can be established un-der FDI which are Limited Liability Company (LLC) and Private Shareholder Company and both forms could be owned by one shareholder, also it determined the minimum capital for each company under each activity, the Emiratization thresholds, and the specific conditions for certain business activities.

 

The are 122 economic activities are specified in the "positive list" that is attached to the Positive List Resolution N' 16 for the year 2020 mainly in Agriculture, Industrial and Services sectors, including (amongst others) activities in the following sectors:

  • Agriculture
  • Manufacturing
  • Transport and Storage
  • Hospitality and Food Services
  • Information and Communications
  • Science and Technology
  • Healthcare
  • Education
  • Art and Entertainment,
  • Construction
  • Legal and Accounting Services

Roedl & Partner have a devoted, expert Foreign Direct Investment team, with extensive experience of advising Foreign Investors on corporate structuring and related issues in the UAE along with the specific requirement for applying and executing FDI Law.

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