UAE “On-Shore” Expat LLCs

As you know, Federal Decree Law No. 26 of 2020 amends the Federal Law No. 2 of 2015 on Commercial Companies opening the door for 100% foreign owned “UAE on-shore” limited liability companies (the “Expat LLC”). We will not spend any time waxing lyrical about this change. That’s been done to death. Much is still unclear about the change; here is what we know...

What We Currently Know

By Osman Aboubakr and Maheen Qasim

As you know, Federal Decree Law No. 26 of 2020 amends the Federal Law No. 2 of 2015 on Commercial Companies opening the door for 100% foreign owned “UAE on-shore” limited liability companies (the “Expat LLC”).

We will not spend any time waxing lyrical about this change. That’s been done to death.

Much is still unclear about the change; here is what we know:

1. Lists have been published by various UAE Emirates with the activities that can be conducted through an Expat LLC. Check these first before spending anytime trying to figure out whether your business can benefit from this change.

2. InvestInDubai.ae is the platform through which you can log-on, create an account and set-up an Expat LLC. The platform works in cooperation with the Dubai Department of Economic Development (“DED”) to administer the set-up of Expat LLCs.

3. InvestInDubai.ae has a relatively simple registration process which then allows you to access the platform to perform the basic steps of choosing/reserving your company’s trade name and choosing your company’s business activities and legal form. The platform asks for owner details, capital amounts, and shareholding information, and ultimately leads to a licensing and approval stage.

4. Of course, if you are “old-school”, the incorporation process can still be initiated at any DED counter, where you will deal with a human being.

5. We understand from the DED that the following aspects of incorporation remain the same: documentary requirements, fees, and incorporation steps.

6. We also understand from the DED that an Expat LLC, in certain circumstances, may be held by a single foreign owner, although the circumstances are not yet entirely clear.

7. An example provided regarding fees and costs: setting up an Expat LLC would be approximately AED 11,000, plus 5% of the “Ejari” contract value, plus a trade name reservation fee of between AED 620-3,000 (varies depending on the name), plus an activities approval fee (unknown, but varies, depending on the activity).

8. The following are some of the significant data points which remain to be clarified:

a. How will visas/employment/labor logistics be handled by Expat LLCs?

b. Can an eligible free zone company “migrate” onshore?

c. Will eligible on-shore companies, currently held in accordance with foreign ownership restrictions (“Dual LLCs”), change their ownership restructure – is this an aspiration?

d. Can foreign owners in a Dual LLC force the UAE owner to exit? Will exits and related compensation be regulated?

We admit that this is all very preliminary information.

Like you we await further information.

We will provide updates as we get to know them.

Argentum Law is an international advisory firm built on leveraging technology and connectivity to provide general counsel and transactional services through virtual offices. With years of experience working remotely, our lawyers are available to provide counsel with minimal disruption during this time of crisis.

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