100% Foreign Ownership in the UAE: What Changed and What It Means (2026)

For much of the UAE's modern history, foreign entrepreneurs who wanted a mainland company faced a fixed structural constraint: a UAE national had to hold at least 51% of the shares. The company might be funded entirely by foreign capital and run entirely by foreign management, but the licence required an Emirati majority shareholder. That changed in 2021, and the change is significant for anyone weighing up how to structure a UAE business.

This guide explains what the 2021 reforms actually did, which activities now allow full foreign ownership on the mainland, which still require Emirati participation, and how the reform affects the choice between a mainland company and a free zone entity.

What the law said before 2021

The rule that dominated UAE company formation for decades came from Federal Law No. 2 of 2015 on Commercial Companies (and its predecessor, the 1984 Companies Law). Under that framework, a Limited Liability Company (LLC) on the UAE mainland had to have at least 51% of its shares held by a UAE national or a company wholly owned by UAE nationals.

In practice, this meant foreign founders had two options. The first was to find a local partner, a UAE national who would hold the majority stake on paper. The relationship was governed by a side agreement (often called a nominee or profit-sharing agreement) that directed most of the economic benefit to the foreign founder, but the legal ownership remained split. The second option was to incorporate in a free zone, where 100% foreign ownership had always been permitted, and accept the restrictions that came with operating outside the mainland.

Neither option was ideal. The local partner arrangement created legal and commercial risk: the partner held genuine equity, and disputes, succession issues, or a change of heart could have serious consequences. The free zone option solved the ownership problem but limited direct trading on the UAE mainland.

What the 2021 reform actually changed

In November 2020, the UAE government announced a sweeping revision to the Commercial Companies Law. The amended law, Federal Decree-Law No. 26 of 2020, came into force on 2 January 2021. The core change: the 51% UAE-national ownership requirement was removed as a blanket rule.

The new framework works differently. Rather than requiring Emirati majority ownership for all activities, the law now identifies a specific list of activities that are considered of strategic impact to the national interest. Only those activities continue to require Emirati participation. Everything not on the list is open to 100% foreign ownership.

The strategic-impact list is set by Cabinet Resolution. The current resolution identifies activities broadly grouped around:

• National defence and security
• Certain utilities and infrastructure sectors
• Firearms, explosives and related industries
• Fisheries and maritime activities
• Certain printing and publishing activities with national-security implications
• Some categories of financial and money-exchange services
• Specific elements of the media broadcasting sector
• Activities reserved under other federal sector laws (banking, insurance and certain professions are governed by separate legislation)

The list is not exhaustive in the sense that sector-specific laws (for banks, insurance companies, law firms, and similar regulated professions) continue to impose their own ownership or licence requirements independently of the Companies Law. If your business falls into a heavily regulated sector, the Companies Law reform is only part of the picture.

Activities open to 100% foreign ownership: the practical reality

For the vast majority of business activities that UK and international founders pursue in the UAE, 100% foreign ownership on the mainland is now available. This includes:

This is illustrative, not exhaustive. The licensing authorities maintain detailed activity lists, and a single licence application can cover multiple specific activities. The point is that the categories above, which account for a large proportion of what international founders actually do, are now accessible without an Emirati partner.

Activities that may still require an Emirati partner

Even after the 2021 reform, certain activities and sectors remain restricted. In addition to the Cabinet Resolution strategic-impact list, sector-specific laws create their own ownership requirements:

For founders in these sectors, some form of Emirati participation, whether as a shareholding partner or as a registered local service agent (who holds no equity but facilitates licensing), remains part of the structure. The nature of that participation depends on the specific regulation and the activity.

It is worth distinguishing between a local equity partner and a local service agent. Under the old regime, the Emirati partner held real shares. Under the current framework, for activities where an Emirati national's involvement is required for licensing purposes but not equity, the structure often uses a registered agent rather than a shareholder. The agent takes a fee but has no ownership stake. This is a materially different and far lower-risk arrangement than the old nominee shareholder model.

Free zones: the baseline that the mainland has now approached

Free zones were established in the UAE precisely to offer foreign investors certainty of ownership. Every free zone company, whether in the DMCC, IFZA, Meydan, RAKEZ, DIFC, SHAMS or any of the other zones, has always been 100% foreign-owned. This was the founding premise of the free zone model.

What the 2021 mainland reform does is bring the ownership question closer to parity. But the two structures remain legally and commercially distinct in ways that matter:

• A mainland company can trade directly with customers anywhere in the UAE, employ staff on mainland visa quotas, operate retail premises on the mainland, and bid for federal and Emirate government contracts without restriction.
• A free zone company is incorporated within a specific free zone's jurisdiction, typically has restrictions on selling directly to UAE mainland customers (requiring a mainland distributor or a separate mainland entity for that purpose), and operates under the free zone's own regulations.

The practical implication: if your revenue comes predominantly from international clients, or your model does not require direct consumer sales or government contracts on the mainland, a free zone company may still be the simpler and more cost-effective choice. If you need to operate freely across the UAE economy, a 100% foreign-owned mainland LLC is now a genuine option where it was not before.

What this means for your structure decision

The 2021 reform changes the frame for the mainland versus free zone comparison. Previously, one of the main reasons to choose a free zone was ownership: you wanted 100% control without the complexity and risk of a local partner. That reason is now largely gone for most activities.

The decision now turns more cleanly on the commercial and operational question: where are your customers and what trading rights do you need?

The strategic picture

The 2021 reform is not a technical tweak. It represents a deliberate policy shift to attract foreign capital and entrepreneurship to the UAE mainland, not just to free zones. The UAE government's broader economic agenda, under initiatives such as the Principles of the 50 and the National Strategy for Industry and Advanced Technology, is to position the country as a destination for high-value businesses, not just a transit point for capital.

For UK founders considering a UAE setup, the ownership reform removes one of the historic objections to a mainland structure. Combined with the UAE's corporate tax framework (9% on taxable profits above AED 375,000, with a 0% rate available for qualifying free zone income), a zero rate on personal income, and a functioning UK–UAE double tax treaty, the structural environment is more straightforward than it was five years ago.

The questions that remain are practical: choosing the right Emirate and licensing authority, selecting between mainland and free zone based on your commercial model, ensuring genuine UAE substance if you want to support a UAE tax position, and understanding how the UAE entity fits with any continuing UK obligations. Our free zone vs mainland vs offshore guide covers the structural comparison in more depth, and our company formation service page explains how we help with the setup end to end.

If you want to talk through which structure fits your business, get in touch. We work with UK and UAE advisers on both sides of the move, and can give you a clear answer on whether 100% foreign ownership on the mainland, a free zone structure, or a combination is right for your situation.