The Federal Decree-Law No. 26/2020 (Decree) of the United Arab Emirates (UAE) will take effect on January 2, 2021. This Federal Decree-Law contains several significant amendments affecting LLCs and joint-stock companies, including some key amendments that will likely have an impact on foreign direct investment in the UAE, as well as some amendments affecting LLC governance, as LLCs are the most common corporate structure used by foreign investors.

Affects:

• Article 10 of the CCL was altered by Federal Decree-Law, which removed the default requirement of at least 51 percent Emirati ownership in an LLC or joint-stock company. Rather, foreign nationals may control 100% of LLCs and joint-stock corporations unless they are engaged in a \”strategic impact\” activity.
• Article 10 has been revised to provide for the formation of a committee to evaluate which activities have a \”strategic impact\” and the controls required for firms to do business in these activities.
• Based on the committee\’s recommendations, the UAE Cabinet will issue a decision outlining these activities as well as the applicable licensing controls. The competent authorities of each Emirate will determine the particular percentage of Emirati involvement in the capital and/or board of the firms to be incorporated in their jurisdictions, subject to the UAE Cabinet\’s decision.
• In addition, the modified Article 10 specifies that the UAE Cabinet has the authority to exempt any company whose activities are governed by specific legislation from any action or rule relating to an Emirati\’s shareholder percentage or contribution to a company\’s management.
• The new Federal Decree-Law, in addition to revising Article 10 of the CCL, also repeals the previous FDI Law and, by extension, Cabinet Decision No. 16/2020.

We, \”Dubai Best Lawyers,\” advise enterprises to take advantage of this opportunity to review their memorandums of association to see if any changes are required to conform with the CCL\’s updated rules. In terms of changes affecting foreign ownership, we will continue to keep an eye on any new developments and keep you informed.