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Patience is a virtue

Patience is a virtue

There’s evidently no rush to reform the UAE’s Company Law, which limits foreigners to 49 percent ownership.

September 9, 2008 10:35 by

While wasting time on the internet, Kipp came across this interesting nugget buried in an April 2006 article in Gulf News. In a report to the World Trade Organization, the UAE conceded it would have to reform its Company Law, which puts a cap of 49 percent ownership on all foreign investors in “onshore” companies – that is, anything not within the free zone.

It’s a move that’s been under discussion for quite some time.

“Currently, discussions are under way in the UAE to re-examine the Federal Commercial Law that limits foreigners to minority stakes in local firms the historical cap of 49 percent. To some extent, these restrictions have affected the flow of FDI,” the report said.

“The demographic structure of the UAE is such that nationals constitute the minority vis-à-vis foreigners, while the UAE is a major capital exporter. Those factors explain the philosophy of the current regime, i.e. preserving and protecting the economic interests of the nationals and guaranteeing them a share in their own market.

“However, after reaching a certain maturity, and due to the UAE’s obligations under international trade negotiations, the government is developing a comprehensive strategy to deal with this new juncture.

“The main objective is to further diversify the economy. The reform of the current investment framework [through amendments to the Company Law] is perceived as one of the most important ways to materialize this objective and attract more FDI to support this endeavor.”

Nothing against proper planning – we merely note these words were published two and a half years ago.

Earlier this year, in March, the government’s minister of economy said the government is “expecting to finish the law within six months.” Sultan Bin Saeed Al Mansouri told reporters, “We will allow 100 per cent foreign ownership wherever it helps the economy,”

Six months from March would be – right about now.

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