Structural Details of Foreign Direct Investment Law

A new Decree Law No. 19 of 2018 has been issued after the announcements made earlier this year on the loosening of domestic ownership restrictions. The new Decree-Law compliments the Federal Law No. (18) of 2017 and amends the Federal Law No. (2) of 2015 on Commercial Companies. The amendment provides that the law relating to the mandatory holding of 51% shareholding of LLCs by UAE national or entities might soon be lifted through the resolution of the UAE Cabinet for specific sectors.

The new law aims to attract more foreign investment and boost the economic growth of the country making the country the first pick among global investors. It aims to promote the country’s investment environment. The law further states that a “Foreign Direct Investment Committee” shall be formed through a resolution to overcome the technicalities of implementing the new Decree-Law. The committee will be headed by the Ministry of Economy and will be responsible for referring the sectors and activities to the UAE Cabinet that can avail the benefit of the scheme.

The Cabinet will soon issue the list of sectors that can have increased foreign ownership. The Cabinet will also approve the different types of restrictions that can be applied to the various sectors where foreign ownership is 49% to 100%. In addition, the restriction can be on the office location, on the capital, and on the Emiratisation policies.

A negative list of the sectors that shall not be impacted by the Decree has already been made available. It includes sectors like insurance services, financing, banking, transport services including land and air, medical retail services and commercial agency services.

The Cabinet will also take into consideration the impact on the economy of the sectors that will have a positive effect from the scheme. The impact shall be seen on the innovation front, job opportunities created for UAE citizens and the profile of foreign investors in the country.

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