100% foreign ownership will add more flavour to Sharjah’s economy

Inayat-ur-Rahman,Business Editor

The Sharjah Economic Development Department (SEDD) announced that from this month it would be implementing the full foreign ownership policy, allowing investors of natural and legal persons to own 100 per cent of commercial and industrial companies and practice activities in the Emirate of Sharjah.

This decision includes no requirements such as a specific capital or any additional fees for foreign investors, while allowing branches of foreign companies to conduct their business in the Emirate without the need for an agent of a foreign company.

Marwan Bin Jassim Al Sarkal, Executive Chairman of the Sharjah Investment and Development Authority (Shurooq) told Gulf Today that the implementation of the new Commercial Companies Law signals the natural progression of our long-term economic strategy as envisioned and carefully employed by the UAE’s wise leadership to provide global businesses and investors better access to our diverse and high-growth markets.”

He added: “The law also paves the way for those operating in strategic sectors to enter Sharjah’s resilient economic landscape, which is continually enriched by Shurooq’s world-class developments in numerous sectors.”

Mohamed Juma Al Musharrkh, CEO of the Sharjah FDI Office (Invest in Sharjah), operating under the Sharjah Investment and Development Authority (Shurooq), said: “Over the past few years, Sharjah has solidified its regional and global reputation as a lucrative FDI destination that offers businesses and investors an entire gamut of competitive advantages, regional expansion opportunities as well as sustainable growth.”

He continued: “As the emirate’s FDI performance continues to grow through 2020 and early 2021 despite a global crisis, we are excited to see how this landmark law helps us build on this momentum by triggering new investments not only in the popular sectors of retail, tourism, technology, healthcare, but also in 10 additional sectors of strategic importance to Sharjah’s and the UAE’s socioeconomic future.”

Meanwhile, last month the UAE Ministry of Economy has made a very important announcement stating that the new Commercial Company Law with regards to 100 per cent Foreign Ownership will be effective from  June 1, 2021.

The new law will enable companies to apply for business license without the requirement of UAE National as the partner of the company. The new law will enable UAE as an investment destination for majority of international conglomerates and this will boost UAE’s competitive edge.

Abdulla  Bin Touq  Al  Marri, Minister of Economy, said, “The amended Commercial Companies Law aims at boosting the country’s competitive edge and is a part of UAE government efforts to facilitate doing business.”

Bin Touq added that the amendments introduced by the new Commercial Companies Law will boost the UAE’s appeal as an attractive destination for both foreign investors, entrepreneurs and talents. It will further strengthen the country’s position as an international economic centre and encourage the flow of investments to the country’s vital economic sectors.

The changes are part of a series of measures introduced to make the UAE a more investment-friendly destination, which have also included the offer of 10-year visas for investors and citizenship for Investors and talented professionals.

According to the announcement, all the existing business in the mainland can amend their license according to the new Commercial Companies law.

On 23rd November 2020, the President of the United Arab Emirates, His Highness Sheikh Khalifa Bin Zayed Al Nahyan issued a long-anticipated ground breaking decree “Federal Decree Law No. 26 of 2020”, amending the restrictions on foreign ownership within the Companies Law in the United Arab Emirates. The newly issued decree amended the pertinent provisions of the UAE Federal Law No. 2 of 2015 and supersedes the UAE Federal Law No. 19 of 2018 on Foreign Direct Investment (FDI Law). From that point onwards, Ministry of Economy was working on widening the scope of sectors from 3 and finalizing the sectors to be included in the scope. Last month, Ministry of Economy made an announcement that they are working on a new legislation to add 10 more business sectors to the commercial Company law.

As per the new law, many categories of business license will no longer require UAE National as a 51 per cent shareholder of the company. Moreover, the mandatory requirement of having the Local Service Agent will also be no longer applicable as per the new Commercial Company Law.

However, there are exceptions for a few businesses operating in sectors that are strategically important to the UAE. The new decision is not applicable for companies wholly owned by Federal or local Government or their subsidiaries.

In a truly diverse and cosmopolitan environment such as the UAE, already attracting some of the best talents from all over the world, such move can really project the jurisdiction among the most palatable for global investors, which will now be able to enjoy carrying on their business within a familiar legal framework and having the comfort of the full control of their business.