This booklet is a compilation of a series of communique aimed to update you on the new FDI Law Update. We encapsulated the provisions of the Law and resolutions in the flyers to give insights on how these changes will cement UAE’s position as the most preferred investment destination in the region. We have compiled some of the major queries from our clients and contacts and attempt here to clarify them.
QUERY Are the provisions of the new Law update applicable for trading entities? The positive list released as per the CR does not include trading entities for enhanced foreign ownership. However, Retail Trade (non-specialized stores) with an investment of AED 100 million is permitted.
QUERY What is the minimum amount of physical investment that has to be evidenced immediately for getting approval for a FDI Company? As per the guidelines issued by Dubai FDI, 20% of the proposed investment must be evidenced in the form of physical capital.
QUERY Currently most of the professional/consultancy firms are registered as per the provisions of UAE Civil Code and with unlimited liability on the investors. Does the Cabinet Resolution provide a procedure for converting the civil partnership firm to a Limited Liability Company or PSC to be eligible as a FDI Company? As per the guidelines on FDI issued by the Ministry of Economy, if the legal form of the existing entity is different from the form specified for the FDI Companies, the change of the legal status to any legal form specified for FDI Companies shall be processed according to the procedures provided for in the UAE Commercial Companies Law -2015.
QUERY Is the Positive List published as per the CR conclusive? Foreign Investor may still submit to FDI Committee or the Competent Authority, a request for approval to license a project not listed in the Positive List.
QUERY Are FDI Companies with agricultural or manufacturing activity allowed freehold ownership of property and land? As per Article 9 of the FDI Law, the right to benefit from any real estate allocated to the Foreign Direct Investment project may not be cancelled, suspended, or restricted except in the event of a violation of the license conditions. Thus, it ensures non-cancellation, non-cessation or limitation of usufruct right of properties allocated for the FDI Project
QUERY Does ‘pharmacy’ include the category ‘other human health activities’? Other human health category includes laboratories, diagnostic and therapeutic centers and the minimum investment requirement is AED 70 million. However, pharmacy has not been included in the list. As per Article 16 of the FDI Law, the activity of Medical retail such as private pharmacies is on the Negative List.
QUERY Are construction of buildings and civil contracting eligible? Permitted only for large-scale infrastructure projects like airports, roads, sports facilities and projects worth more than AED 450 Million
QUERY What is the percentage of Emiratization applicable for FDI Company? Membership in ‘Tawteen Partners Club' of the Ministry of Human Resources & Emiratization is mandatory for an FDI Company. More clarity is awaited on the number of UAE Nationals to be employed by FDI Companies.
QUERY Are the relevant provisions of the Federal Law No: 2 of 2015 on Commercial Companies amended to adjust with the provisions of the Federal Law No. 19 of 2018 on Foreign Direct Investments? The legal form of the existing company shall be one of the forms specified for FDI Companies which includes Limited Liability Company and Private Joint Stock Company. The resolution of the Council of Ministers may exclude Foreign Investment Companies from certain provisions of the Companies Law and the Federal Laws of the State as shall be consistent with the nature of Foreign Direct Investment Projects.
