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Cabinet Resolution No. 16 of 2020 regarding 100% shares of Foreign Direct investment

Updated: Dec 18, 2020

Federal Decree-Law No. 19 of 2018 about Foreign Direct Investment enables the foreign investor to establish and own a company with individually and wholly ownership (100% of its shares).

Cabinet Resolution No. 16 of 2020 is issued to determine exclusively the sectors and business activities, which can be owned and invested by the foreign investor. The resolution determines 122 varied business activities that include agriculture, industry and services sectors.

The decision has defined a foreign investor as a natural or legal person who does not hold UAE nationality and invest in the state. This means that foreign entities that have been established in the UAE can also invest individually in the defined sectors and business activities.

According to article 3, the decision has also set the legal forms of the entities that can be individually owned by the foreign investor. The legal forms can be either a limited liability company or a private joint-stock company.

The decision has excluded what was stated in Article 71 of the Commercial Companies Law, which permitted the natural or legal person of the citizen exclusively to establish a one-person limited liability company, as the decision allowed the foreign investor to do so.

Besides, the decision has excluded what is stipulated in Article 151 of the Commercial Companies Law concerning the management of joint-stock companies.

This article further elaborates that the chairman and the majority of the members of the board of directors should be citizens of the UAE. This means that the foreign entity can be fully managed by non-citizens.

Article 209 of the Companies Law that concerning the minimum percentage of shares that should be owned by citizens has been also excluded by the Resolution.

The positive list that has been determined by The Cabinet Resolution No. 16 of 2020 includes three main sectors for direct investment by the foreign investor.

Agricultural sector (activities number 1 to 19)

This list includes the cultivation of various crops in addition to supportive activities related to animal production.

Industrial Sector (activities number 20 to 70)

This list includes various industries including food products manufacturing, beverage manufacturing, garment industry, chemical manufacturing y, metallurgical manufacturing, computer manufacturing, in addition to many heavy industries such as shipbuilding, hovercraft, and air and space vehicles.

Services sector (activities number 71 to 122)

This sector involves various of range consultation services such as legal, engineering, and accounting. In addition to medical services, educational services, including primary, secondary and higher education. There are a lot of wide range of other service business activities.

Source : Ministry of Cabinet affairs and the future General secretariat of the cabinet

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