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New Foreign Investment Decree in UAE

Published: 05/11/2018

UAE President His Highness Sheikh Khalifa bin Zayed Al Nahyan has issued a new Decree (Decree Law No. 19 of 2018) (“Decree”), which seeks to boost Foreign Direct Investment (“FDI”) in the UAE and further solidify the country’s position as a ‘Global Business Hub’.

Article 2 of the Decree is aimed at strengthening the position of the country as a major destination for foreign direct investment at both regional and international level and attract new FDI into the UAE.
 

Highlights of the Decree

 
Foreign Ownership

The Decree is aimed to facilitate the establishment of companies with up to 100% foreign capital in certain strategic sectors and such companies will, pursuant to the Decree, be treated as national companies, to the extent the applicable laws and treaties permit.
 
FDI Committee

The Decree introduced a Foreign Direct Investment Committee (“Committee”) which will be formed pursuant to a resolution by the UAE Cabinet (“Cabinet”) and chaired by the Minister of Economy (“Minister”). The Committee will be responsible for referring recommendations to the Cabinet in connection with sectors, activities and benefits to be granted to the FDI Projects.
 
Territorial Sway of the Decree

While the provisions of the Decree will apply to FDI Projects set up and licensed in the mainland UAE, the benefits of this Decree will not be granted to projects set up in the financial and free zones in the UAE.
 
Positive List

The Decree provides that a “positive list” which includes permitted sectors and activities for FDI Projects will be issued by the Cabinet according to the proposal by the Minister and recommendation by the Committee.

The Decree does however, provide a negative list which includes banking activities, financing, payment systems and dealing in cash; insurance services; land and air transport services; commercial agent services and medical retail services such as private pharmacies etc.
 
Economic Development

The Decree aims to achieve a balanced and sustainable development in the UAE through increasing the flow of foreign direct investments, in priority sectors.
 
Dedicated FDI Unit

Pursuant to Article 5 of the Decree, a dedicated FDI unit (“Unit”) is to be established within the Ministry of Economy, which will amongst other roles clearly set out in the Decree, focus on proposing the policies and procedures relating to FDI and how best to implement new projects.

The Unit will also provide a database containing comprehensive data on current and upcoming investment projects in the UAE.
 
Job Creation

By providing an attractive platform for foreign investors, it is expected that a boost in economy will lead to an increase in job opportunities in the UAE.
 

How we can help:

Our team is well placed to advise you on:

  1. What the Decree means to your business; and
  2. How your business can benefit from the Decree.

For further information on how we can help; contact Samer Qudah, Partner, Head of Corporate Structuring.

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