www.dubaibusinesskey.comNew UAE
Companies Law offers nothing to foreign investors but is that such a bad thing? No one can say that this is a bad or right. UAE is Business hub for all Businesses, www.dubaibusinesskey.com
Foreign investors hoping that the new
UAE Companies Law would allow them to own more than 50 per cent of non-freezone
companies will be very disappointed by the new law that was finally passed
yesterday by the Federal National Council after 10 years of deliberation.
Perhaps not so surprisingly the FNC
has voted to protect the existing interests of UAE citizens rather than expand
the rights of foreigners to own UAE companies. It was always open to debate
whether the gain to the former would compensate for the loss of control through
wider foreign ownership, and nobody can deny that a long debate took place.
New Companies Law
Large foreign companies opening a
branch in the UAE are also to have an obligatory Emirati agent but only as an
employee to help with government interactions. SMEs will be waived the
Emiratization requirement.
The law is expected to come into
force next summer. It makes no change to the ownership structure of UAE companies
outside of freezones. But it does make some important changes to local
corporate governance to bring it in line with global best practice.
It should ensure that boards of
directors, managers and auditors are held to account by shareholders. It gives
the Securities and Commodities Authority increased powers of scrutiny and a
introduces mandatory international auditing systems. Shareholder voting rights
are also set out clearly in the new law.
Stock market impact www.dubaibusinesskey.com
With the UAE stock markets presently
on a roll as the some of the best performing bourses in the world the new UAE
Companies Law, or lack of it as far as foreign investors are concerned, will
not cause any particular problem for local business confidence. In less
confident times it might have posed more of an issue.
It is for UAE nationals to decide
what is in their best interest in the long-term. You can make the case for
greater foreign participation in this already very open economy, or you can say
it is already high enough. The FNC has decided not to push the boundaries out
any further.
Would it really be better to have
giant US hedge funds deciding on the future of UAE companies and for Chinese
multinationals to buy into the country’s asset base? We can see some wisdom in
the FNC’s democratic decision to keep them out.
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