Abu Dhabi: A new companies law will allow majority, but not full, foreign ownership in "some sectors," a senior Abu Dhabi Government official said Tuesday.
"The new companies law will give some relaxation to foreign ownership," Mohammad Omar Abdullah, undersecretary of the Department of Economic Development, said on the sidelines of an investment conference. "But it will not be to the extent of 100 per cent."
Abdullah added the Ministry of Economy is preparing the final draft of the law ahead of its relay to the Federal National Council later this year.
The new companies law has been in the works since 2008, but the provision for allowing majority foreign ownership has only been promoted by the Ministry of Economy since September. Current rules limit foreigners to 49 per cent ownership outside free zones, which allow 100 per cent foreign ownership. Mohammad Al Qamzi, chief executive of the Abu Dhabi Government's Higher Corporation for Specialised Economic Zones (ZonesCorp) said the federal law will likely serve as a "guideline," allowing for flexible implementation at the local level according to each emirate's needs.
Sectors to be excluded from the new legislation will likely be ones of "strategic" value such as oil and gas, Al Qamzi added.
Reform
The UAE has worked to reform its legislative infrastructure to attract foreign investment, for which it has announced an annual growth target of 9 per cent.
"Most countries in the world do have restrictions on foreign ownership," said Nasser Al Saeedi, chief economist at Dubai International Financial Centre, and head of Hawkamah, a regional corporate governance initiative. "As long as you have majority ownership, it will give a strong impulse to the creation of new companies, particularly with capital from residents of UAE."
In August, a presidential decree eliminated the Dh150,000 minimum capital requirement to register a limited liability company, bringing the UAE in line with five other Arab countries who have done so since 2004 and 80 countries worldwide with no such limit.
The UAE moved up 13 positions this year in the World Bank's Doing Business Report 2010 to No 33 out of 183 countries mainly because of reforms implemented in the areas of starting a business, registering property and cross-boarder trading.
Still, Al Saeedi said other reforms need to be implemented to help liberalize the UAE's economy and attract foreign investment.