A New Dawn for Business Ownership - January 04, 2021

His Highness Sheikh Khalifa bin Zayed Al Nahyan, President of the UAE, issued a decree stating that foreign investors can fully own local businesses without the need for an Emirati sponsor. The new legislation replaces the Commercial Companies Law (CCL) No. 2, passed in 2015.

Prior to this, only up to a maximum of 49 per cent ownership was allocated to foreign shareholders in a ‘limited liability company’ (LLC), operating as a mainland UAE business. As per the law, a 100 percent Emirati-owned company or individual was required to hold the remaining 51 per cent share. The amended law allows companies to be fully established without the need for a UAE national involved in the ownership.

Despite the long-awaited reform, a few business sectors are exempt from the FDI law, including energy and hydrocarbons, telecommunications and transport. The law will also not apply to those companies that are either wholly-owned by federal or local governments or their subsidiaries.

Nevertheless, the UAE can now welcome a boost of foreign direct investment that will benefit and revive the economy with fresh business ideas and opportunities. Local and established UAE businesses will also benefit from the enhanced competition as they improve the quality of their products and how they deliver them to the market. As two of the leading, most powerful financial hubs in the world for businesses, Dubai and Abu Dhabi will flourish under the new international influx of trade.

History

The Foreign Direct Investment law was first adopted in September 2018 through Federal Legislative Decree No. 19 of 2018 and was followed up with an ensuing resolution by the UAE Council of Ministers No. 16 of 2020 in March 2020.

The UAE Cabinet Resolution in March 2020 determined a ‘Positive List’ of sectors and economic activities permitted under the FDI law. It further outlined that in companies outside free zones, the percentage of ownership is 100 per cent. This approval, however, remained subject to certain criteria being satisfied.

In recent years, foreign nationals and companies could acquire the remaining stakes on a case by case basis, but this varied between individual Emirates. Now, the highly-anticipated 100 per cent ownership by licensed and registered foreign businesses in the UAE is allowed according to Cabinet Resolution No. 16 of 2020.

What does it mean for the UAE?

UAE Minister of Economy, Abdullah bin Touq Al Marri, stated that the amendment is an additional step in a series of efforts that the UAE is taking to strengthen the national economy. It will also support the country in preparing for the future by developing commercial and investment opportunities, in line with the current and rapid economic changes taking place in the global economy.

A Look at the SME Sphere in the UAE - January 04, 2021

A Look at the SME Sphere in the UAE

2020 has resulted in unprecedented changes to the environment of the global economy, and in turn, challenged the UAE’s economy. Although among some of the hardest hit and most vulnerable enterprises due to the COVID-19 pandemic, SMEs remained resilient in the face of these limitations with several incentives and means of financial support established by the UAE government. 

The government aims to enhance the contribution and performance of the SME sector with initiatives such as the Mohammed Bin Rashid Establishment for SME Development and the Khalifa Fund. The implementation of these funds reiterate how vital SMEs are to the UAE’s economic structure, and the need for these businesses to function due to the valuable opportunities they offer. 

According to the Ministry of Economy, the SME sector represents more than 94 per cent of the total number of companies operating in the country, and contribute 52 per cent of the UAE’s non-oil GDP. SMEs also provide jobs for more than 86 per cent of the private sector’s workforce in the region.

Developing and sustaining non-oil sectors through SMEs is a continual key objective for the Ministry as it allows them to diversify their industries beyond oil revenue. It further ensures the growth of the national economy through a wide range of ventures considering multiple SME sectors such as education, healthcare, technology, fashion, F&B and construction. 

A hub for innovative entrepreneurship, Dubai is one of the best cities for investment due to an abundance of resources for start-ups and a stable business climate.

For insight on what is currently progressing, here are some of the most active SME sectors in the UAE based on finalists of the Gulf Capital SME Awards of 2020 (sourced from MEED).

B2B Small Businesses of the Year

- Align On Demand Labors Supply Services LLC 

Align is a manpower service provider that aims to help businesses grow in a sustainable environment.

- Aleph Hospitality

Aleph Hospitality is a full service hotel management company that assists with a range of services such as site selection, construction and pre-opening, through to the ongoing operation of the hotel.

- COEGA Sunwear

COEGA manufactures durable swimwear and swimming accessories using eco-friendly fabrics made with Lycra Xtra Life fibre.

- Kingston Stanley

Kingston Stanley is a specialist digital, marketing, tech and support services recruitment agency.

- Levtech Consulting LLC

Levtech Consulting is a Microsoft Gold Partner and a Cloud Service Provider helps organizations drive digital transformation through Microsoft Business Solutions.

- MILKSHAKE MEDIA FZ LLC

Milkshake Media is a Dubai-based production house with an expertise in TV commercials, visual content, still-photography and animation.

- Tridel Technologies

Tridel Technologies is an organization that provides environmental solutions that integrate environmental science, engineering, and technology. 

B2C Small Business of the Year

- Bait Al Kandora

Bait Al Kandora is the first Emirati & Gulf designer menswear brand in the UAE that offers quality tailored bespoke & ready-to-wear kandoras, as well as handmade Italian leather footwear, bags and wallets.

- Carlease Rent a Car LLC

Carlease Rent a Car provides short term, long term and monthly car rental, car hiring and leasing in Dubai and the UAE.

- Munchbox

Munchbox is a food delivery service in the UAE that offers clean and healthy diet options such as gluten-free, vegan, keto, baked, vegan, low carb & calorie, high protein, and no sugar added snacks.

- splash n party

Splash ’n’ Party is Dubai’s newest waterpark for kids that caters to birthday parties, kids events and other special events on-site at their venue or at home.

- Stu Williamson Photography

STU is a professional photography studio that provides services across a range of disciplines, from portrait photography, food and drink, weddings and engagement, real estate, corporate events etc.

- Xpert Learning FZLLC

XpertLearning is a consultancy focused on enhancing human talent by providing performance solutions to corporate, academic and government sectors.

Emirati Business of the Year

- Hamdan Al Shamsi Lawyers & Legal Consultants

Hamdan AlShamsi Lawyers & Legal Consultants is a legal practice that provides legal litigation and consultancy expertise. They offer services in areas such as: Banking & Finance Law, Construction Law, Corporate Law, Criminal Law, Family Law, Intellectual Property Law, Maritime Law, Employment (Labour) Law, and Real Estate Law.

- Organic tattoos cosmetics

Organic tattoos cosmetics is the first concept of semi-permanent tattoos in the UAE, allowing people to experiment with tattoos without breaking religious and traditional ideologies.

- The Date Room

The Date Room is an Emirati brand that produces and delivers luxury dates and gift boxes for any and all occasions.

- V I P & PROTOCOL EVENTS MANAGEMENT

VIP Protocol is an Emirati events company providing VIP & protocol management services to private and government entities.

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