Thursday, February 17, 2011

New UAE companies law expected to lift the foreign ownership ceiling from the current 49 per cent

Abu Dhabi: A new UAE companies law that is expected to lift the foreign ownership ceiling from the current 49 per cent in certain businesses could be introduced this year, Minister of Economy Sultan Bin Saeed Al Mansouri said.
"It could be any time this year. At the ministry level, our work is done," Al Mansouri told reporters yesterday on the sidelines of the 5th Annual GCC Regulators Summit. Al Mansouri said the ministry has finalised the draft and is waiting for approval from the UAE authorities concerned.
Experts say the introduction of the new companies law will help attract more foreign investments and give a boost to the local economy and employment.
The UAE Companies Law allows foreigners a maximum stake of 49 per cent in companies outside free zones.
However, foreigners are allowed 100 per cent in companies registered within the free zones. The new law will also make it mandatory for companies to create a general corporate governance framework.

The legislation is part of a move to modernise the UAE's company, foreign investment and industrial laws to boost transparency and investor confidence.

Separately, Al Mansouri in his speech at the regulators summit said that after the financial crisis regulators are assuming increasing roles to strengthen the financial sector.
"The regulatory role is under reform in many countries to touch all bases including systemic stability, micro prudential regulations, conduct of business and consumer protection," he said.
"Regulators need to be proactive by being prepared for adverse outcomes, and need to be reactive to the needs of the industry. The world is still learning from past experiences and evidence shows that the regulatory process is an evolving one," he added.
He said the GCC countries have distinctive regulatory needs since the financial sector in the GCC is developing at an unprecedented pace.
"Regulators need to tackle issues like introducing new instruments besides the pure longing of stocks of listed companies, improve mechanisms like delivery versus payment (DVP), auxiliary tools like security lending and borrowing, licensing new financial services like investment management and regulate existing practices like rating agencies, auditing firms and research and financial analysis services," he said.