New United Arab Emirates Law Governing Companies May Lead to Greater Foreign Ownership
December 15, 2011 in WTO Reporter
By Toula Murphy
DUBAI, United Arab Emirates—The United Arab Emirates’ Cabinet Dec. 4 approved the first major reforms of corporate rules in 27 years, including possible foreign ownership provisions, as the Gulf state seeks to attract more outside investment to help diversify its economy.
“The law will define what a company does, and everything that relates to a company and how it operates,” Lubna Qassim, director of the economic legislations department at the Ministry of Economy, was quoted as saying in the state-funded newspaper, The National.
“[It] paves the way for other business laws in the pipeline,” added Qassim, without elaborating, but analysts believe that may include legislation covering foreign direct investment. She said the draft law will go into effect once it’s published in the government’s Official Gazette, which comes out once a month. When that might happen is still unclear.
Liberalizing Foreign Ownership
The most important provision in the legislation allows the U.A.E. Cabinet to specify the types of businesses and sectors where a foreign partner could hold majority stake. Currently, foreigners can hold up to 49 percent ownership while an Emirati partner must hold the rest…