For decades, setting up a mainland company in Dubai meant finding a UAE national to hold 51% of the shares. That requirement has since been removed for most activities.

But saying that "100% foreign ownership is allowed" is only one part of the story. The real questions are: which activities qualify, what conditions apply, and how is ownership structured legally?

This article explains how mainland foreign ownership works today, including the key legal developments that have shaped the UAE's corporate landscape and the changes introduced in 2025.

How the Old Rule Worked — and What Changed

Before the 2021 reforms, the UAE Commercial Companies Law generally required a UAE national or UAE-owned company to hold at least 51% of the shares in most mainland LLCs, while foreign investors were generally limited to 49%.

Federal Decree-Law No. 26 of 2020 amended the Commercial Companies Law and removed the general 51% UAE-national ownership requirement for many mainland businesses. The foreign ownership provisions became effective from 1 June 2021.

This marked a major change in the UAE's approach to foreign investment. Instead of applying a general 51% local-shareholding requirement, the framework moved towards allowing full foreign ownership while retaining specific controls for activities with strategic impact and other regulated activities.

The current legal framework is principally governed by Federal Decree-Law No. 32 of 2021 on Commercial Companies, together with the applicable Cabinet decisions and emirate-level licensing requirements.

Why the Reform Mattered to Investors

The removal of the general 51% ownership requirement gave foreign investors greater flexibility when establishing businesses in the UAE mainland.

For founders and international investors, retaining full ownership can make the company's ownership structure more straightforward. It can also provide greater flexibility when bringing in investors, restructuring the business or transferring ownership, subject to the applicable legal and regulatory requirements.

The reform also sits alongside the UAE's wider move towards greater corporate transparency, including requirements relating to beneficial ownership and corporate records.

However, ownership alone does not determine whether a company will be approved by a bank, regulator, or other institution. Banks and financial institutions may conduct their own due diligence based on the company's activities, ownership, source of funds, business model, and supporting documentation.

Ownership Depends on Your Activity — Not Simply Your Company Type

This is one of the most important points for anyone planning to establish a mainland company.

100% foreign ownership is not an automatic entitlement for every activity or structure.

For many mainland LLC activities, foreign investors can hold 100% of the shares. However, activities classified as having a strategic impact, together with certain regulated activities, remain subject to specific ownership requirements, approvals, or conditions.

Cabinet Resolution No. 55 of 2021 establishes the list of activities with strategic impact and provides the framework for the regulatory controls applicable to companies operating in those activities.

This means that two businesses that appear similar may have different ownership requirements depending on the precise economic activity and the regulator involved.

For example, a general business activity may qualify for full foreign ownership, while a more specifically regulated activity may require additional government approval or UAE participation.

For this reason, it is important to confirm the exact activity code and licensing requirements before finalising your company's structure.

Which Activities May Still Require Local Participation or Additional Approval?

The strategic-impact framework covers specific sectors and activities where additional regulatory controls apply.

Depending on the exact activity, these can include areas connected with:

• Security and defence
• Financial and insurance activities
• Telecommunications and certain technology-related activities
• Oil and gas and related strategic activities
• Transport and other regulated infrastructure
• Certain activities connected with religious or cultural services
• Other activities designated as having strategic impact

The requirements are not identical across all of these sectors. Some activities may involve UAE participation, while others may require approval from the relevant regulatory authority or compliance with specific ownership and licensing conditions.

Cabinet Resolution No. 55 of 2021 should therefore be read together with the requirements of the relevant sector regulator and the competent licensing authority.

The list and regulatory treatment can change. Therefore, the ownership position for a specific activity should always be confirmed at the time of incorporation.

Local Sponsor vs. Local Service Agent — They Are Not the Same

Another common area of confusion is the difference between a local shareholder/sponsor and a Local Service Agent (LSA).

A local shareholder under the old 51% structure actually held equity in the company. That meant the UAE national appeared as a shareholder and held a legal ownership interest.

A Local Service Agent is different.

An LSA does not automatically become a shareholder simply because they are appointed as an agent. The LSA arrangement is a separate regulatory requirement applicable to certain structures and activities.

In Dubai, for example, certain foreign-owned professional structures may require a UAE national Local Service Agent. The exact requirement depends on the legal form, activity, and applicable licensing rules.

Where an LSA is required, the LSA's role is generally related to government and administrative representation rather than ownership of the business.

Therefore:

Local shareholder ≠ Local Service Agent

An investor can, depending on the applicable structure, retain 100% ownership while separately appointing an LSA where the law requires one.

It is also important not to confuse the LSA requirement for certain professional structures with the former 51% ownership rule. The abolition of the general 51% requirement did not mean that every form of local representation disappeared.

The previous requirement for a UAE national service agent for branches of foreign companies was also removed as part of the earlier corporate-law reforms.

Minimum Capital and Other Licensing Conditions

Even where 100% foreign ownership is permitted, ownership is only one part of the licensing process.

Depending on the activity, the relevant authority may require:

• Minimum capital or financial requirements
• Professional qualifications
• Special regulatory approvals
• Premises or facility requirements
• Environmental approvals
• Technical approvals
• Sector-specific permits
• Additional documentation

Industrial and manufacturing activities, for example, may involve additional requirements relating to facilities, environmental compliance, and technical standards.

These requirements are determined by the nature of the activity and the relevant regulator rather than by a single blanket mainland rule.

What Changed in 2025? More Flexibility in Ownership Structure

Federal Decree-Law No. 20 of 2025 introduced important amendments to the UAE Commercial Companies Law. The amendment was issued on 1 October 2025 and came into force on 15 October 2025.

One of the significant changes is the introduction of greater flexibility in the ownership structure of Limited Liability Companies (LLCs).

Under the amended framework, LLCs can have multiple classes of quotas, allowing different classes to carry different rights and characteristics, subject to the applicable legal requirements and implementing rules.

These may include differences relating to matters such as:

• Voting rights
• Dividend or profit entitlements
• Priority in capital recovery
• Transfer restrictions
• Other rights and protections

The Ministry of Economy and Tourism has specifically described the reform as allowing multiple quota/share classes for LLCs, giving companies greater flexibility in structuring relationships between founders, investors and other shareholders.

This is particularly relevant for businesses considering future investment, succession, joint ventures, or more sophisticated capital structures.

However, the precise categories and conditions applicable to different classes are subject to relevant legislation and implementing decisions. Therefore, companies should not assume that every type of share arrangement available in other jurisdictions can automatically be reproduced in a UAE mainland LLC.

Re-Domiciliation: Moving a Company Without Starting from Scratch

Another important development introduced by the 2025 amendments is a mechanism allowing companies, subject to the applicable requirements and approvals, to transfer their registration between jurisdictions within the UAE, including between mainland and free-zone structures.

The purpose is to allow a company to change its place of registration while retaining its legal personality, rather than necessarily having to liquidate the existing company and establish a completely new entity.

The UAE Ministry of Economy and Tourism has highlighted this as one of the reforms intended to make company structures more flexible and facilitate movement between emirates, free zones and financial free zones.

The process remains subject to the requirements of the relevant authorities, so re-domiciliation should be assessed on a case-by-case basis rather than treated as an automatic conversion route.

A Quick Note on Free Zones

Free-zone companies have historically offered 100% foreign ownership under the rules of their respective free zones. This is separate from mainland foreign-ownership reforms.

The major difference between mainland and free-zone structures is therefore not simply ownership. It can also involve:

• Where the company can conduct business
• Licensing requirements
• Access to the mainland market
• Office and facility requirements
• Regulatory jurisdiction
• Customs considerations
• Sector-specific rules

Dubai also introduced an additional framework in 2025 for certain free-zone establishments wishing to conduct activities outside their free zone and within the Emirate.

What Executive Council Resolution No. 11 of 2025 Means for Dubai Free-Zone Companies

Executive Council Resolution No. 11 of 2025 regulates how free-zone establishments can conduct activities outside their free zones and within Dubai.

Importantly, this does not mean that every free-zone company can automatically operate throughout mainland Dubai simply because it has a free-zone licence.

Under the Resolution, the Dubai Department of Economy and Tourism (DET) may authorise eligible free-zone establishments through mechanisms that include:

• A licence to establish a branch within Dubai;
• A licence to establish a branch operating out of the free zone; or
• A temporary permit to conduct specified activities within Dubai.

The applicable route depends on the activity and the conditions set by DET and the relevant free-zone licensing authority. Prior approval and other regulatory approvals may also be required.

For temporary permits, the Resolution provides for a permit of up to six months, subject to the conditions specified in the Resolution. It also requires the establishment to maintain separate financial records for activities conducted outside the free zone and those conducted within it.

The Resolution was issued on 3 March 2025 and came into force upon publication in the Official Gazette.

This gives eligible free-zone businesses an additional route to access Dubai's wider market, but it should not be confused with an automatic conversion of a free-zone licence into a mainland licence.

Getting Your Ownership Structure Right from Day One

The UAE's foreign-ownership framework has changed significantly over the past few years.

For many mainland businesses, a foreign investor can now establish and own the company without the traditional 51% UAE-national shareholder arrangement. At the same time, specific strategic-impact activities, regulated sectors and certain professional structures may still involve additional requirements.

The 2025 amendments add another layer of flexibility by allowing greater choice in LLC ownership structures and introducing mechanisms for corporate re-domiciliation.

The key is to look beyond the simple question of "Can foreigners own 100%?"

You should also confirm:

At Expertz Business Hub, we help investors assess their proposed activity, understand the applicable ownership requirements, structure their company appropriately, and manage the Dubai licensing process from start to finish.