Dubai: The new Federal Law (Law No. 14) of 2018 regarding the Central Bank & Organisation of Financial Institutions and Activities requires a minimum of 60 per cent UAE ownership for local banks licenced to operate in the country.

Article 74 of the law requires all UAE banks to be formed as public joint-stock companies. However, branches of foreign banks operating in the country are exempt from this requirement.

Other financial institutions are free to be formed as joint-stock companies or limited-liability companies, in accordance with the rules and conditions issued by the central bank’s board. Exchange houses and monetary intermediaries are allowed under sole proprietorship, or take any other legal form in accordance with the rules and conditions issued by the central bank’s board of directors.

While minimum capital requirements of all categories of financial institutions and banks will be decided by the central bank, from time to time, the central bank’s board can increase or decrease capital requirements and is empowered to determine its risk-based capital requirements and the necessary actions to be taken in case of capital shortfall.

While it will be a legal requirement to keep a minimum 60 per cent national shareholding of banks incorporated in the UAE, the central bank can decide on the conditions, controls for percentage of ownership of shares and shareholdings contribution in the capital of Other Financial Institutions incorporated in the State by nationals and foreigners.

Article 77 of the new law also requires licensed financial institutions to seek central bank’s approval for amendments to their Memorandum or Articles of Association. Any such amendments will take effect only after they were entered into the register. The law has also empowered the central bank to reject the application. The central bank board of directors’ decision on such matters will be final.

Controlling shares

Article 93 of the law specifies conditions under which a shareholder in a bank can hold a controlling stake. The law prohibits shareholders from acquiring or selling controlling shareholding in a bank of financial institutions without the prior approval of the central bank. The board of the central bank is empowered to issue regulations, rules, standards, conditions, instructions, and restrictions relating to interests and instances of control.

Expansion or contraction of branches within and outside the UAE by UAE-based banks and financial institutions will require approval of the central bank. A licensed financial institution shall not establish any branch or representative office inside the state or in any other jurisdictions, or relocate or close down any existing branch without central bank’s prior approval.

For the full text of the UAE’s new banking law, please visit:


At a glance

— UAE bank’s should have a minimum of 60 per cent national shareholding

— All banks need to be public joint-stock companies except branches of foreign banks

— Central Bank’s prior approval required in acquisition or sale of controlling stakes in a UAE bank

— Exchange houses’ ownership can be sole proprietorships

— Expansion or contraction of bank branch network needs central bank approval