Dubai has become one of the top global hubs for business and commerce over the last few decades. Its business-friendly regulations, tax incentives, and world-class infrastructure make it an attractive destination for entrepreneurs and investors from all over the world looking to set up their operations or expand into new markets.
A common question that arises is whether foreigners can fully own a company in Dubai. In other words, can an investor own 100% shares of a company registered in the emirate?
The answer is yes, the laws do permit for 100% foreign ownership in Dubai in certain jurisdictions like Free Zones and through the DED license framework. However, the exact laws and limits depend on:
- The legal structure of the business
- The location of registration
- The business activity
Below we take an in-depth look at the shareholder ownership laws in Dubai, including:
- Foreign ownership allowance across different entities
- Requirements and restrictions based on location and activity
- Steps for setting up fully owned subsidiaries and establishments
- Other factors determining equity proportions
Reviewing all applicable rules and policies will enable foreign investors to make informed decisions when starting or acquiring companies in Dubai.
Foreign Ownership Laws in Dubai
The commercial companies law of the UAE federal government permits foreigners to own up to 49% equity in limited liability companies registered in the mainland. The remaining 51% shares must be held by a local partner or sponsor.
This 51-49 threshold does not apply if the business is registered in one of Dubai’s Free Zones or is licensed by the Dubai Economic Department (DED) as a branch firm of a foreign company. In such exempt cases, the foreign investor can hold 100% ownership without any local partner if certain eligibility criteria are met.
Here is a breakdown of maximum foreign ownership by legal structure across different jurisdictions in Dubai:
| Business Structure | Mainland/Onshore | Free Zones | DED Branch |
|---|---|---|---|
| Limited Liability Company (LLC) | 49% | 100% | NA |
| Private Limited Company | 49% | 100% | 100% |
| Public Limited Company | 49% | 100% | 100% |
| Branch/Representative Office | NA | 100% | 100% |
| Civil Company | 0% | NA | NA |
| Sole Proprietorship | 0% | 100% | NA |
So in the mainland, meeting the 51% local ownership criteria is compulsory for most common structures like an LLC or Private Limited Company. But within Free Zones or the DED framework, sole foreign proprietorship is permitted.
Factors Determining the Scope of Foreign Ownership
We just saw that the location and legal form set certain boundaries on how much equity foreign shareholders can hold in Dubai based companies. But there are a few other crucial factors that determine whether 100% ownership is possible:
1. Business Activity
In the mainland and certain free zones, the foreign ownership limit applicable is also based on your line of business. As per UAE Commercial Companies Law, only the following activities can have 100% overseas capital:
- Healthcare
- Education
- Renewable energy
- Space and aeronautics
- Transportation (some segments)
- Hospitality and tourism
- Information and communications technology
- Management consulting
- Sports clubs management
So if your proposed business falls under any of the above categories, you will face no restrictions even when registering in the mainland as an LLC or Private/Public Company.
However, foreign ownership allowance also depends on:
2. Approvals from Regulatory Bodies
While the Department of Economic Development (DED) oversees commercial registration and licensing in Dubai, there are a number of specialized regulatory bodies that govern specific industries and activities.
For instance, companies involved in healthcare, finance, education, food retail, tourism, media etc. require clearances from regulatory agencies like the Health Authority, Central Bank, Economic Department etc. before starting operations.
Many such bodies stipulate certain foreign ownership limitations or extra requirements even if the activity otherwise permits 100% overseas capital in Dubai. Hence, you must review ownership guidelines for your target sector before finalizing corporate structure.
3. Government Policies and Incentives
In order to attract more foreign direct investment (FDI) into Dubai, the government offers extended ownership rights, tax breaks, custom duty exemptions and other benefits to overseas investors across select sectors.
For example, UAE Federal Law No. 19 of 2018 allows international investors to own 100% of the shares in 122 different economic activities in the mainland if certain qualification criteria are met in terms of investment size, job creation, sector focus, development goals etc.
Such policies continue to evolve so stay updated on industry-specific incentives, subsidies, ownership caps as well any amendments that may impact existing companies with overseas shareholders.
4. Emiratization Requirements
Emiratization or UAE nization policies were introduced by the government to get more Emirati citizens employed in skilled jobs across private enterprises in certain sectors.
Under Emiratization rules, companies dealing in banking, insurance, trade, and hospitality must meet specific employment quotas for hiring UAE nationals – which can range from 1 to 40 percent of the total workforce based on the activity and size of business.
Therefore, apart from corporate ownership structure, staffing requirements prescribed by law is another factor entrepreneurs must consider when setting up in Dubai.
Steps for Establishing a 100% Foreign Owned Company
If your business meets all the relevant eligibility criteria, regulations, and conditions, the process for setting up a solely foreign held establishment is relatively straightforward.
Here are the standard steps to follow:
1. Identify Right Location and Legal Entity
First and foremost, you must pick an appropriate Free Zone or authority for registration that aligns with your target industry, proposed activities, immigration needs and other factors.
Each jurisdiction offers different license types, office spaces, company structures, compliance policies and ancillary services. Hence, select one that best caters to your operational requirements.
For instance, DMCC Free Zone allows 100% foreign ownership across most sectors but specifically targets commodities trade. Dubai Silicon Oasis (DSO) on the other hand appeals more to technology and digital businesses.
You can also explore options like JAFZA, DAFZA, DHCC, DWC plus there are dedicated zones for crypto, space tech, 3D printing etc.
2. Appoint a Local Service Agent
Even though foreign investors can be the sole owner, appointing a UAE national service agent is mandatory for certain company types like those registered under the DED branch framework.
The key role of the agent is to be your local sponsor to fulfill certain legal and logistical responsibilities. However, they have no bearing on company operations or profits.
Reputed agencies like AmerQuickPlus offer comprehensive company formation and compliance support services in Dubai – including appointing qualified local sponsors.
3. Obtain Trade License and Visas
Once you finalize location and structure, the relevant Free Zone or DED will help secure the appropriate commercial license and residence visas for owners/staff after submitting the required documents and getting all clearances.
Trade licenses explicitly specify business activities the company is registered to conduct in the jurisdiction based on their internal compliances and approvals.
4. Lease Office Space
If looking to setup an office in your chosen free zone or district, after licensing you can rent suitable commercial space and get amenities like electricity, IT infrastructure etc. activated.
Based on your work dynamics, there are co-working spaces, flexi-desks, retail units, warehouses, plots or custom built offices available. Manage access cards, signboards, parking etc.
Virtual office packages are more suitable if you primarily operate overseas and need just a registered local address.
5. Handle Banking, Accounting and Reporting
Open corporate accounts with banks operating in Dubai to receive capital injections, manage transactions and working capital requirements. Appoint auditors, tax consultants and PROs for ongoing accounting, payroll reporting and immigration formalities.
Stay compliant with quarterly filings, license renewals and other administered obligations like health insurance, Emiratization quotas etc. applicable based on your license type.
With the right local partners assisting you at each step, the administrative process is straightforward for overseas investors. Reach out to relevant authorities and advisors to clarify any doubts beforehand.
Conclusion
In summary, while mainland commercial licenses limit foreign investors to 49% ownership, Dubai's free zones and DED offer flexible options for establishing fully owned private limited companies, public enterprises, proprietary establishments or branch subsidiaries based on:
- The nature of business activity and target industry
- Approvals from governing bodies
- Minimum capital and operational requirements
- Adherence to Emiratization quotas
By selecting optimal jurisdictions, legal structures and working with experienced corporate service providers, international entrepreneurs can setup wholly owned subsidiaries in Dubai across most sectors barring a few that need local participation.
With the right research and expert guidance, GLOBAL investors can leverage such opportunities to enter and expand within the high-growth Middle East markets.
Key Takeaways
- Foreigners can own 100% of the shares in Dubai registered companies in Free Zones and DED branches
- Critical factors determining equity proportion are - legal structure, sector, approvals, incentives and staffing rules
- Main steps to establish fully foreign owned firm involve - selecting location/license type, appointing agent, securing trade license/visas, setting up office and managing reporting
- With expert assistance and complying with policies, overseas investors can wholly own private enterprises across most industries in Dubai
Conclusion
In summary, 100% foreign ownership is permitted in Dubai's business friendly ecosystem, especially in Free Zones and for certain licensed activities. By selecting the optimal location, legal structure and working with corporate service providers, international entrepreneurs can leverage such provisions to setup wholly owned private enterprises across a wide range of sectors in Dubai.
Frequently Asked Questions
Q1: Can a foreigner fully own an LLC in Dubai?
A1: No, UAE Commercial Companies Law limits foreign shareholders in mainland LLCs to 49% equity maximum. Only 51% or higher ownership is possible in Free Zones and DED licensed branches.
Q2: What sectors allow 100% overseas capital in Dubai?
A2: Technology, renewables, healthcare, education, transportation, tourism, media, sports, logistics etc. allow full foreign ownership in Dubai, subject to approvals.
Q3: Is a local sponsor required for foreign owned company?
A3: Mainland LLCs require 51% shares to be held by a UAE national sponsor. But in Free Zones and DED branches, while appointing a service agent is mandatory, sponsors are not required.
Q4: Can I own a business with only trade license in Dubai?
A4: Yes, 100% foreign owned commercial licenses are available in all Free Zones. But mainland trade licenses have ownership limitations based on activity.
Q5: How much capital is required to setup company in Dubai?
A5: The minimum share capital requirements range from AED 1,000 in some free zones to AED 300,000 in DED depending on legal structure and business activity.
Q6: What are the documents needed for company registration in Dubai?
A6: Copy of valid passport/emirates ID, no criminal record certificate, proof of address, initial approval & reserved name certificates, memorandum and article of association etc.
Q7: How much does it cost to establish company in Dubai?
A7: Costs vary from 15-20k AED for LLC formation including government fees, legal consultancy charges, licensing expenses, office rent etc.
Q8: How long does it take to form a company in Dubai?
A8: With all documents in place, it takes 7-10 days to form an LLC/sole establishment and 10-15 days for DED branch in Dubai on average.
Q9: Can I own a company in Dubai while living abroad?
A9: Yes, you can be a 100% foreign owner and sponsor your own residence visa even while being non-resident if the firm is registered in a free zone.
Q10: How is foreign owned company profits taxed in Dubai?
A10: 0% corporate and income tax applies in free zones. For mainland and DED firms, tax is only applicable on local operations of foreign shareholders.
Q11: Can I own multiple companies in Dubai on a residence visa?
A11: Yes, an expatriate residence visa holder can be partner/shareholder in up to 3 legally separate companies licensed in Dubai.
Q12: Can I register a company in Dubai with property visa?
A12: No, only residency visas allow company ownership in Dubai. But property investors can setup firms in some border free zones using tourist visa.
Q13: What no of directors are required for a private company in Dubai?
A13: A minimum of 1 director is mandatory for private limited companies in Dubai free zones and mainland. Public firms require minimum 3 directors.
Q14: Must foreign companies register a branch before working in Dubai?
A14: If the overseas parent firm is directly conducting business activity with UAE based clients, trade license is mandatory. Else only internal reporting applies.
Q15: Can someone else fully own a business under my name in Dubai?
A15: Legally the name(s) featuring as shareholder(s) in the memorandum of association must only be that of beneficial owner(s) entitled to profits.
Q16: Where is it easier to establish a foreign owned company in UAE?
A16: Majority free zones in Dubai and AD offer 100% ownership across most sectors. Comparison tools help identify optimal jurisdictions.
Q17: Can a foreigner use local agent for full ownership in Dubai?
A17: No, while agents facilitate licensing in DED branches, the legal beneficial owner entitled to profits can only be the foreign investor in such entities.
Q18: How to transfer sponsorship of my company to another owner in Dubai?
A18: Approval from DED/free zone authority is required to change a company's shareholders/partners - along with updating new details across licenses and bank accounts.
Q19: Can I operate multiple activities under a foreign owned trading license?
A19: No, regulated activities cannot be conducted if not explicitly specified on the mainland/free zone issued trade license as per DED and local directives.
Q20: Do business activities need pre approval before acquiring foreign owned company in Dubai?
A20: Yes, activities of firms being acquired by overseas investors must conform to foreign ownership catalogues by law, so cannot conduct prohibited activities post transfer.