UAE's New Commercial Law Will Give Foreign Companies 70% Maximum Stake In Local Firms

Lorys Charambolous, Tax-news.com, Cyprus

29 March 2001

According to the Gulf News agency a draft of a new commercial law is about to be finalised which will allow foreign companies up to a 70 per cent stake in local firms. In addition the UAE's insurance market will be opened to foreign firms. Both initiatives are part of the UAE's ambition to open up its markets and boost economic growth.

The last of the discussions concerning the amended Companies Law provision that deals with foreign participation and stakeholding are now being concluded confirmed Hussain Al Nowais, Abu Dhabi Chamber board member and chairman of Emirates Holdings in his address to delegates at a recent conference on Energy, Infrastructure and Finance in the Middle East.

He said that it is likely that the majority shareholding for foreign companies will be limited to particular industries, and that the future of free zones in the country will be affected by the new law. 'There is also a proposal to open up the insurance sector to foreign companies and this could happen by the end of 2001,' he added.

Al Nowais also highlighted the need for a bigger local market which would act as a common market in the GCC to open up capital markets. Reforms in education and a larger, skilled local workforce would also be necessary. He noted: 'The private sector will take the lead in the growth of the region. There could be greater inter-emirate and inter-GCC integration in policy making ... We are noticing a confident private sector, which will lead the economies and compensate for lower growth in the oil sectors.'

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