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Adler & Partners is an international consultancy firm focused on providing high net worth individuals with the ability to apply for residence and citizenship by investment programs in different countries and business setup in UAE. Our team of highly qualified experts work together as one within our global network of partners, to serve the increasing demand for second citizenships within the international community of entrepreneurs and investors.

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The Ministry of Economics of the UAE has announced that the amended commercial enterprise legislation will be implemented on 1 June this year and will allow the creation and complete ownership of on-shore companies by international investors and businessmen.

The UAE administration formally introduced legislation allowing companies to be entirely owned by foreigners.

The question is what’s in it for you?

If you decide to go for a company set up in the UAE, do check your benefits…

The UAE administration formally introduced legislation allowing companies to be entirely owned by foreigners.

The question is what’s in it for you?

If you decide to go for a company set up in the UAE, do check your benefits…

It has the potential to have a significant impact on the UAE’s attractiveness to international direct investment, but how crucial is it for start-ups or investments in UAE companies? In particular, the risk capital ecosystem should try to establish, relocate, or invest on-shore rather than in free zones where it can be handled relatively readily.

What are the business activities that come with complete ownership?

General trade, contracting, jewellery, gold, pearls, luxury watches, foods, and automobile and truck trading are among the commercial enterprises in which complete ownership is available.

Metals and construction, flooring, building materials, meals, water generation, and paints are among the industries that have full ownership.

A kindergarten, primary and middle schools, and a hotel all wanted to be 100% owned.

According to Dubai Economy, the list of 100% foreign ownership includes over 1,000 commercial and industrial companies, excluding economic activity with a strategic influence, which is limited to seven sectors.

How can it impact the startup and venture capital ecosystem of the country?

  • Applicability

Not all companies are eligible to hold 100% foreign ownership, with each Emirate issuing particular guidelines. We now understand that there will be a minimum requirement for share capital of 100% foreign-owned enterprises, and we have seen a minimum share capital requirement of $4 million in the recently published guidance. According to the same guidance, certain organizations must hire at least 5 sector specialists; technology businesses, in particular, must meet this criterion, which includes a computer system and software design. For other operations, such as e-commerce or online marketplaces, the rules are still murky. As a result, it will be some time before early-stage enterprises in these industries may benefit from the new law until the standards are established.

  • Ease of business

Due to the change in laws, onshore startups’ current local ownership arrangements, which were put in place to comply with the former foreign ownership limitations, may be terminated (i.e., a local UAE entity or individual being required to hold 51 percent of their business). These arrangements can be costly, and when nominees are required to attend notarial appointments or sign investment paperwork, they can make it more difficult to conclude deals. As a result, a decrease in the cost of conducting business and an increase in the ease of transacting is likely to have a large positive impact on the onshore venture ecosystem.

Nonetheless, we believe free zones will continue to dominate the UAE’s venture capital ecosystem, particularly for early-stage startups and VC investors. The Dubai International Financial Centre (DIFC) is far closer to other technology hubs such as London and Silicon Valley than the onshore UAE in terms of ease of doing business. Onshore UAE installations and investment transactions will remain burdensome, with a number of administrative hurdles to overcome (e.g. notarial visits) that are clearly inconvenient for VCs and startups, given the pace at which transactions must be completed and the dynamic nature of such arrangements.

  • Venture FDI

Moving to 100 percent foreign ownership will certainly make external funding easier for firms that are already operating onshore. At the moment, convincing investors in more mature venture ecosystems that they will need to split ownership of their investment target with a UAE national company or individual who would (typically) have no participation with the business’s operations is a challenging cognitive jump. By removing this stumbling block, onshore UAE projects will become more appealing to foreign investors, who will be reassured by the cleaner ownership arrangements provided by the new rules.

How can you get full ownership in Dubai?

Investors seeking full ownership can complete the procedures with the help of experienced business setup consultants at Adler&Partners, which provides the most cost-effective way to start a business in Dubai.

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