One of the key corporate law reforms was implemented in the UAE in 2020 with the adoption of the amended Federal Commercial Companies Law, which came into force on 1 April 2021. As a result of this reform, foreign companies were granted the right to 100% foreign ownership when registering a business on the UAE mainland, without the mandatory involvement of a local partner.
Previously, foreign companies conducting commercial activities outside free economic zones were required to appoint a UAE national as a local partner holding at least a 51% ownership stake. This requirement applied to most types of commercial activities (except certain service licenses) and significantly limited business ownership structures.
What has changed
As a result of the reform:
- foreign individuals and legal entities are now entitled to own 100% of a company’s share capital on the UAE mainland;
- the requirement to appoint a nominal or actual local partner has been abolished for most business activities;
- management control and profit entitlement remain fully with the foreign owner.
As a result, mainland company registration in the UAE has become comparable to free zone structures in terms of ownership control and transparency, while still providing direct access to the domestic UAE market.
Exceptions and regulated sectors
Despite the liberalization, certain strategically important sectors may still require UAE national participation. These sectors include, in particular:
- defense and security;
- the oil and gas industry;
- public utilities (water and electricity);
- certain types of transport and telecommunications activities;
- concession-based projects.
The list of such activities is determined at the level of individual emirates and relevant regulatory authorities and may vary by region and licensing body.
Banking and financial sector
Foreign banks and financial institutions remain subject to specific regulatory regimes. Separate requirements apply, as established by the UAE Central Bank and other supervisory authorities. Banks registered in free economic zones are also governed by special regulations issued by the relevant financial regulators.
Significance of the reform for business
The abolition of mandatory local partnership represents a major milestone in the development of the UAE’s business environment and has significantly increased the country’s attractiveness to international investors.
The reform has:
- simplified business ownership structures;
- reduced legal and operational risks;
- enhanced transparency in corporate governance;
- strengthened the UAE’s position as a global business and investment hub.
Combined with the absence of personal income tax, advanced infrastructure, and an extensive network of double taxation treaties, the new rules have made the UAE one of the most competitive jurisdictions for conducting international business in 2026.
