It is often said, with a measure of truth, that one must always look after number one. It’s a rather blunt statement of a rather blunt and incomplete principle, which may and perhaps should, occasion the rolling of the eyes.
As with so many other truisms, it is possessed of a germ of truth - but to apply it? It seems to advocate the kind of protectionism and isolationism that can only stymie a national economy in an ever-more internationalised world. ‘No man is an island, entire of itself…’ wrote the epicist John Donne - how apt for the 21st century is that sentiment penned in the 17th?
To give a listen to the wisdoms of the hallowed past, it couldn’t hurt, surely? It was with characteristic prescience that the UAE decided to blaze new trails and embody how best to prosper an economy in these exceptionally trying times.
The UAE introduced federal legislation that allows foreign investors to enjoy total ownership of companies they set up in the country. The change became public knowledge following the release of amendments made to the Commercial Companies Law in September 2020. The amendments remove the legal requirement for majority ownership by an Emirati entity as well as the need to appoint an Emirati national as an agent.
Another reason to
Naturally, the immediate effect of this has been to heighten interest in a country that is already highly sought after for its business climate. Everyone wants to live in the UAE, or at the very least, to visit more than once. One need only look at the number of prominent social media influencers who have made Dubai their operative domain.
The fact that the Dubai Department of Economic Development has approved an ‘open canon’ list of more than 1,000 business activities has everyone think of - at the very least, discuss - setting up in this booming oasis.
Undoubtedly, the amendments will serve to bring more people and businesses to these shores. The question on everyone’s minds is how best to maximise the benefits. The country’s 45 plus free zones have allowed complete foreign ownership since they came into being, with the added benefit of very low operational costs.
It’s certainly true that this set of highly welcome developments has significantly eased the path for onshore ownership with a view to levelling the playing field. It remains early days in terms of application, with the implementation having only just taken place at the beginning of last month. At this stage, it’s important to remember that any and all considerations are qualified speculation at best.
It is likely that the free zones will remain at the apex of the venture capital and nascent start-ups for the simple reason that these zones are well-trod territory offering ostensibly the same benefits in terms of costs, transparency and ease. People will always like familiarity and, for some time, they will be keen for others to take the initial plunge.
One consideration doing the rounds is that Dubai International Financial City (DIFC) and Abu Dhabi General Market (ADGM) are closest to the tech hubs of London and Silicon Valley. Onshore entities will have to familiarise themselves with the rules governing transactions, and when juxtaposed with the comparatively streamlined procedures of these two bodies, the latter will likely retain their historic appeal.
Reset on equal footing
Operating costs are also an oft-cited concern. Licensing fees are quite competitive and determined by the size and remit of the business, but they often require the lease of office space, which can be expensive. Virtual offices are an option for those who don’t need or require physical space, but they can be costs $5,000 a year. So. the popularity of this option is waning.
What is crucial to remember is that the purpose in this legislation is an egalitarian one. It’s to give businesses an equal footing on which to pursue their endeavours. It will prevent sector monopolization, giving everyone as a good a chance at success by diversifying their options.
These are objectives that the laws facilitate and which they will unquestionably realise when they have had enough time for their effects to become pervasive. Thinking into the not-all-too-distant future, it’s absolutely clear that in the fullness of time, the generous terms these laws accord to businesses will be taken advantage of.
When that happens, others will see and hope to reap the same benefits. Whatever reticence they may have exhibited will, no doubt, inspire certain parties to inaudibly utter, ‘We told you so’.