The UAE firm adopted the long-awaited Foreign Direct Investment Act (FDI Law) in another historic step. The legislation aims to liberalize the onshore legal ownership system and provide a favorable business environment for international investors. The much-debated reforms have been authorized by His Sheik Khalifa bin Zayed Al Nahyan, President of His Highness.
Area of Focus:
The revised FDI Act amends 51 new items and focuses primarily on regulating requirements on limited liability shareholder firms. The revisions free expatriate investors from UAE nationals’ minimum share of ownership. FDI legislation will allow UAE to use a fertile legislative environment to set up companies to boost the competitiveness of the UAE.
How do new FDI laws affect the Emirates?
The FDI laws are excellent news for the people of the UAE, with immigrants every eight in 10, and 49 percent of their property has been limited to companies outside free zones.
The 100 percent ownership of enterprises licenced and registered in the UAE by foreign people is allowed by Cabinet Resolution No. 16 of 2020. Individual emirates have enabled foreign national owners to acquire the remaining holdings on a case-by-case basis in the past few years. The new FDI legislation significantly broadens the scope. But new legislation is also believed to represent a severe blow to Emirati citizens’ long-standing retirement benefits, as a large majority of them live as partner companies.
The FDI legislation entered into force on 1 December 2020. The adjustments to foreign ownership may take effect within six months. It may potentially take up to a year for enterprises to start to comply with new changes.
The fundamental goal of establishing FDI laws and other revolutionary actions lately done by the UAE government is to restore the economy from the disturbances caused by Covid-19. The world pandemic has postponed significant events, such as the ‘World Expo’ – 2020′ until the coming year, which has made the situation worse for the UAE economy since the government has spent billions of dollars organizing the event. Twenty-five million tourists were expected to attend the World Expo-2020.
The UAE Government began offering substantial relaxing to the Islamic legal code, cohabitation regulations and restrictions on alcohol consumption from the beginning of November 2020 to overcome the devastating repercussions of such disturbances. These initiatives will have a successful influence on the UAE’s national competitiveness.
The presidential order amending company legislation will allow the UAE to reinforce one of the world’s most attractive investment destinations for multinational companies. Under the revised FDI scheme, Emiratis will no longer be required by many business licences as sponsors with 51% shareholding rights by 1 December 2020.
Impact of FDI legislation on the real estate sector in the UAE:
The Foreign Direct Investment Law allows for 100% ownership of foreign investors. Simply put, foreign investors and business people can now set up their enterprises without the involvement of local stockholders. It is believed that these reforms will affect the investment landscape. Experts believe that FDI liberalization will draw significant investment to the UAE and stimulate immobilization growth. Investments in the real estate sector will increase exponentially, leading to extra revenues, job creation and economic development.
The success of the real estate sector also has a positive impact on companies such as Fajar Realty. The company is one of the top 20 property management companies in the UAE, offering professionally, new faster and end-to-end solutions to the major real estate brands like Emirates REIT, Meraas Estates, Emaar Properties, Al Fattan, Mazaya, Tamniyat and Constellation Holding in Property Management, Community Management, Owner Affairs and Services. Fajar Realty is a proud recipient of many significant accolades, including the latest Superbrands 2018 and Gulf Real Estate Awards 2018 for Best Employer in Real Estate.