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UAE cabinet issues resolution regarding foreign direct investment (“FDI”) 

  • UAE


    Following the release of the list of economic activities that are eligible for up to 100% foreign ownership by the UAE government in July 2019 (‘Positive List’), the UAE cabinet issued on 26 March 2020 cabinet resolution number 16 of 2020 (‘Cabinet Resolution’) officially adopting the Positive List. The Cabinet Resolution was published in the Official Gazette and came into effect on 1 April 2020.

    Positive list

    The Positive List is split into three sectors, namely agriculture, manufacturing and services. It includes 122 economic activities (and categories of activities) spread over a range of sub-sectors including, amongst others, manufacturing in various industries, food services, construction, renewable energy, hospitality, architecture and other engineering services, storage and transportation, art and entertainment, information technology, space, administrative and support services and scientific research and development. The Positive List sets out the minimum capital requirements as well as other conditions that must be satisfied by foreign investors in order to benefit from the Positive List.

    Form of legal entity

    In addition to adopting the Positive List, the Cabinet Resolution provides further guidance on the legal form of the entities that a foreign investor can use and the eligibility criteria for foreign direct investment licenses in the UAE.

    Key highlights

    Key highlights of the Cabinet Resolution include the following:

    1. An entity that is eligible for FDI (an “FDI company”) may take the form of a limited liability company, including a single person company, or a private joint stock company.

    2. Minimum capital requirements for the majority of economic activities eligible for 100% foreign ownership are set out in the Positive List. Capital requirements for certain activities will be determined in the future pursuant to applicable regulations.

    The amount of capital required differs depending on the category of the economic activity that a foreign investor is looking to participate in, ranging from AED7.5 million to AED10 million for agricultural activities; AED2 million and AED100 million for manufacturing activities; and between AED70 million and AED100 million for services related activities. At least 20% of the prescribed share capital is required to be deposited with a local UAE bank at the time of incorporation of the relevant FDI company.

    3. An FDI company is required to adhere to Emiratization regulations prescribed by the UAE Ministry of Human Resources and Emiratization in respect of hiring a minimum number of national employees.

    Our regulatory team is available anytime if you have any questions on, or would like to discuss any of the issues relating to, the Cabinet Resolution or the UAE foreign direct investment law generally.

    This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full terms and conditions on our website.

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