United Arab Emirates: UAE Cabinet Approves The Positive List Of Sectors Under The Foreign Direct Investment Law

Last Updated: 17 July 2019
Article by Will Seivewright and Philippe Habib

On 30 October 2018, the UAE government issued UAE Federal Law No. 19 of 2018 on Foreign Direct Investment (FDI Law). The FDI Law provides a regulatory framework which would allow foreign shareholders to own up to 100% of UAE companies incorporated outside of the designated free zones (known as "Onshore"). The aim of the FDI Law was to position the UAE as an attractive destination for foreign direct investment, and provides exceptions to the UAE's foreign ownership restrictions under the UAE Commercial Companies Law (Federal Law No. 2 of 2015), which limit a foreign shareholder to holding a maximum of 49% of the shares in a company incorporated Onshore.

The FDI Law tasked the foreign direct investment committee (Committee) with recommending to the UAE Council of Ministers a "positive" list, i.e. a list setting out the economic sectors in which more than 49% of foreign ownership will be permitted (the Positive List). The "negative" list, on the other hand, was set out in the FDI Law, and restricted the Committee from including them in the Positive List, and therefore, the sectors set out in the negative list were not eligible for greater levels of foreign ownership ( read more about the "negative" list).

Earlier this year, the Committee issued its proposed Positive List to the UAE Council of Ministers. The UAE Council of Ministers met on 2 July 2019 and, based on the recommendation of the Committee, issued a resolution approving the Positive List, although delegated the precise application of the Positive List up to local governments (being the individual governments in each Emirate of the UAE). The resolution will be officially published in the UAE Official Gazette, which generally takes approximately two weeks from the date of endorsement by the President of the UAE. Following endorsement, each of the governments in the seven Emirates of the UAE will need to determine the percentage of foreign ownership allowed for the activities on the Positive List. In the absence of a requirement to harmonize foreign ownership levels across the Emirates, different Emirates may theoretically implement different foreign ownership thresholds for the same sectors.

The Positive List was issued by the UAE Ministry of Economy on 5 July 2019 in Arabic only and comprises 122 economic activities across 13 sectors. The list consists of 19 activities from the agricultural sector, 51 activities from the industrial sector and 52 activities from the services sector.

The Positive List sets out further requirements for foreign investors to be entitled to greater shareholding in UAE companies. For the agricultural and the industrial sectors, (i) there is a minimum capital requirement of AED7.5 million for the vast majority of the agriculture related activities and between AED2 million to AED100 million for the industrial related activities; (ii) all foreign investors are required to participate in the Emiratisation Club at the Ministry of Human Resources and Emiratisation; and (iii) foreign investors must use modern technology in the production process, demonstrate high added value, contribute to research and development (research and design) and fulfill the requirements of the licensing authorities in the UAE. It is not yet clear what the requirements under (iii) are as no guidance has been issued as to how a foreign investor would be able to demonstrate high added value, how contribution to research and design will be measured, what the Emiratisation requirements will be and to what extent would technology be considered "modern".

The activities on the Positive List relating to the services sector have similar requirements. Most of the minimum capital requirements have not changed, while for retail trading in unspecialized stores, hospital activities and other activities in the field of human health those are AED100 million, AED100 million and AED70 million, respectively. Specific requirements apply to certain service sector based activities. For example, computer programming and consulting related activities require the foreign investor to demonstrate it has at least five computer programming specialists in the UAE by the anniversary of the company's incorporation. Lastly, foreign investors would be required to participate in the Emiratisation Club at the Ministry of Human Resources and Emiratisation but would not need to demonstrate high added value or contribute to research and design.

The publication of the Positive List is expected to change the foreign investment landscape in the UAE, particularly to those wishing to invest a controlling majority in UAE Onshore companies, or to foreign investors looking to restructure their existing shareholding arrangements in the UAE to own a controlling majority, if not all the shares, in UAE Onshore companies. The expectation is that foreign investors will find the UAE a more appealing investment hub, particularly as we approach Expo 2020 Dubai.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions