After the implementation of Federal Direct Investment (FDI) law, UAE business owners are heading to buy local partner shares.
Business experts and analysts are of the belief that the biggest corporate deals in the UAE could involve foreign investors buying the other 51% shares that used to be owned by their UAE national partners.
This move will completely restructure the corporate sector in the country. This is one of the major reforms made by the UAE Government in the year 2019.
In the coming year of 2020, Dubai seems to be leading the way in foreign investments and current businessmen are delighted and welcome this move.
There are a couple of cases in which onshore businesses buy their other parts of shares from the local partners. The chocolate producer Mars is the first case after the FDI law has come into effect. According to the Gulf news, a leading healthcare service provider is also willing to explore this option.
Business owners think that tough it is not directly linked with Expo 2020, the timing of this federal law reform is pretty much accurate. And it will attract the international investors and federal direct investment that will eventually boost the domestic revenue and enhance the investment growth before the Expo 2020.
What does the law say?
- This procedure will apply to both new and existing business in UAE mainland
- Current business operating in the mainland of UAE with 49% ownership, will need to obtain the approval from the local partner and it will go further to the licensing authority of the emirate where the business is incorporated.
- After the initial approval, the foreign investor will submit the application to the authority who is directly dealing FDI. The authority shall issue a decision within a maximum period of business days.
- The applicant will be issued a license if the application gets approved. If not, the applicant can raise an objection before the dispute resolution department formed by the FDI committee.
- The other factors will also need to be considered such as tax, compliance and regulatory issues before making this move with the existing company.
The new mainland company that is owned 100% by the non-local in UAE is getting popular with the name as ‘’FDI Company’’