Can Foreigners Really Own 100% of a Business in the UAE? Here's the Truth
The United Arab Emirates (UAE) has long been a magnet for global investors, thanks to its strategic location, world-class infrastructure and business-friendly policies. Positioned as a bridge between East and West, the UAE offers access to vibrant markets, state-of-the-art facilities and a tax environment that encourages growth. However, for decades, one factor tempered its appeal: strict restrictions on foreign ownership. Historically, foreign investors could only hold up to 49% of mainland companies, with a mandatory 51% stake reserved for local Emirati sponsors. This requirement often led to complex partnerships and potential challenges, deterring some international businesses from fully committing.
In recent years, the UAE has undergone a dramatic transformation. The introduction of Federal Decree-Law No. 26 of 2020 marked a turning point, allowing foreign investors to own 100% of companies in most sectors. This bold reform has streamlined business setup, reduced costs and significantly boosted the UAE's attractiveness as a global investment destination. Today, the UAE is not just a regional hub but a leader in fostering an open environment for international capital.
Explore the evolution of foreign ownership restrictions in the UAE, from their historical roots to the groundbreaking 2020 reforms and the sectors that still require local ownership. History of Foreign Ownership in the UAE
To appreciate the significance of recent changes, it's essential to understand the historical context. For decades, the UAE enforced a 49% cap on foreign ownership in mainland companies, known as the "51/49 rule." This meant that any business operating outside of free zones had to have a UAE national as a majority shareholder, holding 51% of the company.
The rationale behind this rule was multifaceted: Economic Protection : Ensuring local businesses and citizens benefited from economic growth.
: Ensuring local businesses and citizens benefited from economic growth. Control Over Key Sectors : Maintaining national oversight in strategic industries.
: Maintaining national oversight in strategic industries. Cultural Preservation: Safeguarding local identity in a rapidly globalizing economy.
However, this requirement posed challenges. Finding a reliable local sponsor could be time-consuming and costly, and the sponsor's involvement sometimes led to operational inefficiencies or conflicts. To circumvent these restrictions, many foreign investors turned to the UAE's free zones, such as Dubai Internet City (Dubai Internet City) and Abu Dhabi's Masdar City (Masdar City). These zones offered 100% foreign ownership, tax exemptions and streamlined bureaucracy, making them a popular choice for international companies. The 2020 Legal Reforms
The turning point came in 2020 with Federal Decree-Law No. 26 of 2020, which amended the Commercial Companies Law. This landmark legislation allowed foreign investors to own 100% of companies in most sectors on the UAE mainland, eliminating the need for a local sponsor in many cases. The reform, effective since 2021, aligns with the UAE's Vision 2030 strategy to diversify its economy and attract more foreign direct investment.
Key aspects of the reform include: Broad Sector Coverage : The UAE Cabinet published a "positive list" of 122 economic activities across 13 sectors eligible for 100% foreign ownership. These include: Technology and IT (e.g., software development, tech startups) Healthcare (e.g., medical clinics, pharmaceutical companies) Education (e.g., private schools, training centers) Tourism and Hospitality (e.g., hotels, tour operators) Manufacturing (e.g., production plants) Media and Entertainment (e.g., advertising, film production) Logistics and Supply Chain (e.g., warehousing, transportation) E-commerce (e.g., online retail) Financial Services (e.g., investment firms, financial advisory)
: The UAE Cabinet published a "positive list" of 122 economic activities across 13 sectors eligible for 100% foreign ownership. These include: Simplified Setup : Investors no longer need to engage a local sponsor, reducing costs and administrative hurdles.
: Investors no longer need to engage a local sponsor, reducing costs and administrative hurdles. Increased Autonomy: Full ownership allows greater control over business operations and profits.
The impact has been significant. The reforms have streamlined business registration, enhanced investor confidence, and led to a surge in foreign direct investment. Lists of permitted activities are available through the Department of Economic Development in Abu Dhabi (Abu Dhabi DED) and the Department of Economy and Tourism in Dubai (Dubai DET). Who Still Faces Restrictions?
While the reforms have opened many opportunities, certain sectors remain restricted due to their strategic or cultural significance. According to Cabinet Resolution No. 55 of 2021, the following activities require local ownership:
Security and Defence Activities and Activities of a Military Nature Military Garments Manufacturing
Military Men Clothing & Uniforms Tailoring
Medium Military Weapons Manufacturing
Metal Badges & Military Insignia Manufacturing
Military Tools & Supplies Manufacturing
Dismantling & Destroying Equipment & Military Weapons
Military Dress Trading
Military Weapons Trading
Military Equipment Trading
Military Ammunition, Explosives & Pyrotechnic Products Trading
Military Scrap Trading
Military Tools & Supplies Trading
Military Vehicles & Equipment Spare Parts Trading
Naval & land Unexploded Ordnance & Mines Disposal
Light Military Weapons Manufacturing
Military Heavy Weapons Manufacturing
Military Ammunition Manufacturing
Explosives & Pyrotechnic Products Manufacturing
Building of Military Ships
Military Aircrafts Manufacturing
Toughened & Laminated Flat Glass Manufacturing
Propellant Powders Manufacturing
Radar Equipment Manufacturing
Military Plants Equipment Manufacturing
Military Ballistic & Guided Missiles Manufacturing
Military Fighting Vehicles Manufacturing
Tanks Manufacturing
Armoured Amphibious Military Vehicles Manufacturing
Military Remote-Control Systems Manufacture
Sensors & Military Communication Systems Manufacturing
Plating Machinery & Vehicles
Military Equipment Repair & Maintenance
Military Aircrafts Repair & Maintenance
Military Ships Repair & Maintenance
Military Reality-Based Training
Defence & Security Companies' Representation
Military Consultancy
Defence & Surveillance Systems Development
Missiles & weapons Technology Development
Military Aircrafts Safety & Protection Systems Development
Military Technology Research & Development
Control & Command Systems Development
Banks, Exchange, Financing, Insurance and Bank Note or Coin Production Commercial Bank
Islamic Bank
Credit & Finance Bank
Investment Bank
Savings Bank
Wholesale Bank
Digital Wallet for Electronic Payments
Hawala Brokers Services
Real Estate Financing
Industrial Financing
Agricultural Financing
E-Finance
Consumer Loans of Consumer Credit
Financing Operations
Accidents & Civil Liabilities Insurance
Life Insurance
Credit & Saving Insurance
Fire Insurance
Theft Insurance
Work Compensation Insurance
Motor, Marine, Aviation & Transport Insurance
Health Insurance
Mechanical Failure Insurance
Other types of insurance
Reinsurance
Reinsurance
Life Reinsurance
Money Exchangers
Money Orders & Travellers Cheques Exchangers
Remittance of Local & Foreign Currencies
E-Banking
Insurance Actuaries
Insurance Broker
Insurance Agent
Banknotes Printing
Coin Minting
Telecommunications Radio Broadcasting Station
Wired Telecommunications Services
Operating & Maintaining Switching & Transmission Facilities
Cable Distribution & Data & Television Signals Operation
Television & Radio Broadcasting Via Encrypted & Open Channels
Wireless Telecommunications Services
Satellite Communications Services
Satellite Ground Station
Other Categories Commercial Agencies
Hajj & Umrah Organizing
Holy Quran Recitation Institute
Fish Catching
Natural Pearl Catching
Marine Animals Catching
(The list is sourced from Invest in Dubai)
Individual emirates may impose their own regulations. For example, Dubai and Abu Dhabi maintain separate lists of activities eligible for 100% foreign ownership. Investors should consult emirate-specific guidelines, such as those from Dubai's Department of Economy and Tourism (Dubai DET), to ensure compliance.
The UAE's shift from restrictive foreign ownership laws to a more open regime reflects its commitment to economic diversification and global integration. The 2020 reforms have made it easier for foreign investors to establish and control businesses, positioning the UAE as a top destination for international investment.
As of 2025, the country continues to refine its business environment, with ongoing efforts to attract high-value investments in technology, sustainable energy and other key sectors. For global investors, the UAE offers vast opportunities, provided they navigate emirate-specific regulations and sector restrictions carefully. Also Read:
A Step-by-Step Guide to Setting Up Businesses in UAE Mainland
The Ministry of Economy provides clear guidance on the steps involved in establishing a business in the UAE mainland. Read more on how to set up a business in UAE mainland.
Import and Export Business in Dubai: Set-Up Guide
Looking to set up an import-export business in Dubai? Here are the benefits and hurdles of setting up a successful import-export business.
Discover the 10 Most Popular Freehold Zones in Dubai
If you are planning to buy your dream property, Dubai is the ideal city to do so. From luxurious waterfront villas to high-rise apartments and office spaces, there is a property to suit every lifestyle and investment objective. Here are some of the best freehold areas in Dubai you need to consider.
Unlocking golden opportunities: Top Sectors to Invest in Dubai
Want to get the best bet on your money? Here are the top sectors to invest in Dubai.
Is it possible to set up a company or invest in the UAE without physical presence in the country?
Reader wants to know if it is possible to explore investment opportunities or run a business without being a resident.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Filipino Times
2 days ago
- Filipino Times
Abu Dhabi approves AED4.62 billion housing package for over 3,000 Emiratis
A new AED4.62 billion housing package has been approved in Abu Dhabi to support 3,052 Emirati families with home loans and debt relief, under the directives of President Sheikh Mohamed bin Zayed Al Nahyan. The announcement comes just before Eid Al Adha and is part of the country's ongoing efforts to improve the lives of its citizens, especially in building stronger families and communities. Out of the total amount, AED4.4 billion will go to housing loans for 2,862 citizens, while AED212 million will cover loan exemptions for 190 low-income retirees and families of deceased citizens. This is the second housing aid released in 2025, raising the year's total housing benefits in Abu Dhabi to AED11.38 billion. The Abu Dhabi Housing Authority said the package is meant to provide better homes and reduce the financial burden on Emiratis, helping families live more comfortably and securely. Officials also highlighted earlier housing support efforts, including the AED250,000 community subsidy and the option to cut monthly loan payments by up to 50%.
Gulf Today
2 days ago
- Gulf Today
Sheikh Khaled clears Dhs4.62b housing benefits for 3,052 citizens
Under the directives of President His Highness Sheikh Mohamed Bin Zayed Al Nahyan, in his capacity as Ruler of Abu Dhabi, His Highness Sheikh Khaled Bin Mohamed Bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Chairman of the Abu Dhabi Executive Council, has approved a housing benefits package worth Dhs4.62 billion, benefiting 3,052 Emirati citizens across the emirate. The approved housing benefits package includes housing loans amounting to Dhs4.4 billion benefiting 2,862 citizens, and exemptions from housing loan repayments totalling Dhs212 million benefiting 190 citizens, limited-income retirees and beneficiaries of deceased citizens. The disbursement of the second housing package of 2025 comes ahead of Eid Al Adha and reflects the leadership's ongoing commitment to comprehensive development, enhancing the well-being and stability of Emirati families, empowering them to actively contribute to the nation's progress, in line with UAE Year of Community objectives aimed at strengthening social cohesion and reinforcing community solidarity. This package brings the total housing benefits delivered to citizens in Abu Dhabi in 2025 to Dhs11.38 billion. Mohamed Ali Al Shorafa, Chairman of the Board of Directors of Abu Dhabi Housing Authority, said, 'The new housing benefits package reflects the leadership's commitment to empowering citizens through the provision of quality housing that promotes family stability and elevates quality of life. On this occasion, we extend our heartfelt gratitude to President His Highness Sheikh Mohamed Bin Zayed Al Nahyan, and to His Highness Sheikh Khaled Bin Mohamed Bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Chairman of the Abu Dhabi Executive Council, for their enduring support to advance the housing sector and foster a thriving and cohesive society.' Hamad Hareb Al Muhairi, Director-General of Abu Dhabi Housing Authority, said, 'The second housing package of 2025 highlights the depth of our leadership's strategic vision to build a prosperous future, enhancing quality of life and providing sustainable housing solutions that meet Emirati citizens' needs and aspirations. 'The generous support from President His Highness Sheikh Mohamed Bin Zayed Al Nahyan, and His Highness Sheikh Khaled Bin Mohamed Bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Chairman of the Abu Dhabi Executive Council, reaffirms the leadership's steadfast commitment to fostering social and family stability and ensuring a fulfilling life for Emirati families.' The housing benefits package follows the recent endorsement of an additional community support subsidy of Dhs250,000 for existing beneficiaries of housing loans, including a reduction of up to 50 per cent in monthly loan instalments, and a wide range of other services and facilities. WAM
Al Etihad
2 days ago
- Al Etihad
UAE tops region for most skilled workforce, says report
6 June 2025 01:39 ISIDORA CIRIC (ABU DHABI)The UAE workforce is the most skilled in the Middle East and North Africa, according to Coursera's latest report. The country also leads the Arab world across all major categories, including business, technology, data skills, and AI maturity, positioning itself as the region's leading hub for digital readiness and Global Skills Report 2025, published by Coursera on Wednesday, draws from the learning activity of more than 170 million users worldwide and benchmarks performance across over 100 accompanying AI Maturity Index provides a broader view, factoring in academic publications and metrics from the IMF and OECD to measure national progress in AI research, innovation, and UAE ranked 38th globally overall, 17th in business, 46th in data, 53rd in technology, and 32nd in AI maturity, making it the top performer in the Arab world across all four categories, and first in MENA when it comes to overall skills readiness.'The UAE is positioning itself for a tech-driven future, with 87% of employers emphasising technological literacy, AI, and big data as their top priorities,' the report said, linking the country's performance to its national efforts to transition into a knowledge-based economy powered by skilled Emirati country also boasts the highest rate of Coursera learners in the region, with 13% of its labour force actively engaged on the platform. As the total learner base reaches 1.3 million, the UAE's appetite for digital skills shows no signs of slowing to the report, GenAI course enrolments alone surged by 344% year on year — more than double the regional growth rate — while professional certificate and cybersecurity enrolments jumped by 41% and 14%, are playing an increasingly active role in this transition, accounting for 21% of GenAI learners in the UAE, 24% of those enrolled in STEM-related fields, and 23% in professional certificate programmes. Learning habits reflect a younger, mobile-first generation, with 41% of users accessing courses via mobile, and a median learner age of the employer side, demand is rising sharply for expertise in AI and machine learning (up 139%) and customer service (up 96%), while top learner skills in the UAE ranged from corporate accounting and predictive analytics to emerging technologies and leadership development. The UAE's broader economic and policy frameworks are a key driver of this momentum, the report said, pointing out the We the UAE 2031 strategy and workforce development programmes like Nafis, which 'are exceeding private-sector employment targets' and form part of a national vision for a tech-enabled society centred around innovation and competencies. Building on this foundation, the country deployed a wider set of strategies, such as UAE Vision 2030, the Strategy for the Fourth Industrial Revolution, the Emirates Blockchain Strategy, and the UAE Centennial 2071, to support the growth and prosperity of future-focused business sectors.
