Special Privileges and Shares in UAE’s Commercial Landscape

The United Arab Emirates (UAE) has emerged as a global economic powerhouse, renowned for its business-friendly environment, strategic location, and robust legal framework. In its continuous efforts to attract foreign investment and promote economic diversification, the UAE offers various special privileges and shares that play a pivotal role in shaping its commercial landscape. This article explores the key aspects of special privileges and shares in the UAE’s business ecosystem.

Special Privileges for Foreign Investors

1. Free Zones: One of the most prominent features of the UAE’s commercial landscape is its extensive network of free zones. These are designated areas where foreign investors can establish businesses with 100% ownership, without the need for a local partner (sponsor). Free zones offer a wide range of incentives, including tax exemptions, customs benefits, and streamlined administrative processes.
2. Strategic Partnership Agreements: The UAE government has signed strategic partnership agreements with several countries to encourage foreign direct investment (FDI). These agreements often grant special privileges to investors from partner countries, such as preferential treatment in business setup and access to government support services.
3. Long-term Visas: In a bid to attract skilled professionals and investors, the UAE introduced long-term visas, including the Golden Visa program. This initiative offers extended residency to investors, entrepreneurs, and talented individuals, providing them with a sense of security and stability in the country.

Shares and Ownership Structures

1. Limited Liability Company (LLC): An LLC is a common form of business ownership in the UAE, allowing foreigners to have up to 49% ownership while a local Emirati partner holds the remaining 51%. This structure is commonly used for small and medium-sized enterprises (SMEs).
2. Free Zone Companies: In free zones, companies can be 100% owned by foreign shareholders. These entities are subject to specific regulations and are often industry-specific, such as the Dubai International Financial Centre (DIFC) for finance and the Jebel Ali Free Zone for manufacturing.
3. Public Joint Stock Companies (PJSC): Public Joint Stock Companies are open to public investment and are commonly listed on UAE stock exchanges like the Dubai Financial Market (DFM) and the Abu Dhabi Securities Exchange (ADX). These companies issue shares to the public and are regulated by the Securities and Commodities Authority (SCA).
4. Private Joint Stock Companies (PrJSC): Private Joint Stock Companies have a minimum capital requirement and are designed for a small group of shareholders. They are subject to fewer regulatory requirements compared to PJSCs and can have up to 200 shareholders.

Special Types of Shares

1. Founder’s Shares: Founder’s shares are reserved for the initial founders of a company and often come with additional voting rights or other privileges. These shares provide founders with greater control over the company’s operations.
2. Preference Shares: Preference shares are a type of share that provides specific privileges, such as a fixed dividend rate or priority in receiving assets in case of liquidation. These shares are commonly used to attract investors who seek a predictable return on their investment.
3. Treasury Shares: Treasury shares are shares that a company buys back from its shareholders, reducing the number of outstanding shares. These shares can be reissued or canceled, depending on the company’s needs.

WE CAN HELP

The United Arab Emirates offers a plethora of special privileges and shares that cater to the diverse needs of domestic and foreign investors. These provisions have played a vital role in fostering a thriving business environment, attracting investment, and driving economic growth in the region. As the UAE continues to evolve and diversify its economy, understanding these special privileges and shares becomes increasingly crucial for those looking to participate in its dynamic commercial landscape.