Will the new foreign ownership rules impact UAE free zones

Will the new foreign ownership rules impact UAE free zones

There have been new reforms in visa and foreign ownership rules in UAE and even as the news of these reforms go around, there are some speculation that it may impact company formation in UAE’s specially Ajman free zone company formation free zones! Let us analyse the situation.

The new rules for 100% foreign ownership is a bid by the government to encourage foreign investments while also reducing the economy’s reliance on the oil and gas sector. Considering the same reason, the government is also passing a host of new rules to assist growth of other industries.

The 100% foreign ownership in mainland and the 10 year visa for professionals reform has been introduced a couple of months ago but before that 100% foreign ownership were allowed only in free zones and for company formation in mainland UAE, foreign investors were allowed only 49% ownership while a local sponsor had to have 51% ownership of the company.

This decision will lead to benefits as well as shortcomings in free zones. While most investors will be shifting from free zones to, they won’t have the special advantages provided by the free zones as they are not available in mainland.

At the same time, free zones cater all the requirements of a different industrial sectors and industries. Investors may not have this advantage in the mainland. Therefore, there is no significant harm to the free zones of the nation.

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