An UAE government body did not approve of the draft legislation for lighter control on companies owned by foreigners in the United Arab Emirates. The reasons for that are mainly related to security concerns, as well as the bigger local competition that is expected to result from the draft.
The FNC (Federal National Council) is currently discussing the draft legislation for the new foreign ownership law. The draft concerns companies with foreign ownership and, if accepted, it will change the legislation for the first time in nearly 30 years.
Presently, companies in the UAE that are found by foreigners can only operate out of the “free zones” if they join forces with local firms. However, foreigners are not allowed to own majority stakes in them.
The council yesterday refused to adopt a particular clause in the draft legislation. The clause would have given the country’s cabinet the right to allow foreigners to hold stakes equal to up to 100% in business organisations operating outside the free zones.
Yesterday, Mr. Sultan bin Saeed Al-Mansouri, UAEs Economy Minister, discussed the new law with deputies. He said that there was a mutual decision to include the foreign ownership clause in the foreign investment draft that will soon be ready.
Al-Mansouri stated that members present at the session agreed that the foreign ownership clause has more to do with the foreign investment law. The minister also added that some of the conditions and terms in the clause would be revised. According to Al-Mansouri, the deputies of Federal National Council need to obtain more information on the proposed amendment.