Dubai has long been recognized as a global business hub, attracting entrepreneurs, startups, and multinational corporations with its strategic location, tax incentives, and world-class infrastructure. Until recently, one of the key limitations for foreign investors was the requirement to have a local partner for mainland businesses, which restricted 100% ownership to companies operating within free zones.

However, significant changes in the legal landscape have redefined this rule. Today, foreign investors can fully own their businesses on the Dubai mainland across many sectors, marking a major shift in the way business is conducted in the UAE.

In this article, we explain what’s changed, how it affects company registration in Dubai, and what entrepreneurs need to know before they register a company in Dubai under the new ownership model.

The Old Rule: Requirement for a Local Sponsor

Prior to the legal reforms, foreign investors who wanted to set up a business in Dubai mainland were required to partner with a UAE national, who held at least 51% of the shares. This local sponsor arrangement was often a formality, with the foreign investor retaining control over the business through side agreements, but it still imposed limitations in terms of ownership rights and profit distribution.

The only alternative for 100% foreign ownership was to set up in a free zone, where companies are allowed to retain full ownership. However, free zone companies were restricted from directly trading in the local UAE market without using a local distributor or agent.

The Game Changer: 100% Foreign Ownership Allowed

In June 2021, the UAE government implemented a major amendment to the UAE Commercial Companies Law. This reform allowed foreign investors to own 100% of onshore (mainland) businesses in most sectors without the need for a local sponsor or partner.

This was a part of broader economic reforms aimed at increasing foreign direct investment, boosting competitiveness, and positioning the UAE as a global investment destination.

Key Highlights of the New Ownership Rules

1. Applicable to Most Business Activities

Under the new law, full foreign ownership is now permitted for a wide range of business activities. The Dubai Department of Economy and Tourism (DET), formerly known as the Department of Economic Development (DED), issued a list of over 1,000 commercial and industrial activities that qualify for 100% foreign ownership.

Common eligible activities include:

• Consulting services

• Information technology

• E-commerce

• Trading and general commerce

• Manufacturing and industrial businesses

However, some strategic sectors like oil, gas, defense, and telecoms still require local shareholding or special permissions.

2. No Local Service Agent Required for Certain Activities

Previously, even in cases where full ownership was possible for professional licenses (like those held by consultants or freelancers), a Local Service Agent (LSA) was required. With the new changes, many of these professional activities no longer need an LSA, simplifying the structure and reducing ongoing costs for foreign investors.

3. Existing Companies Can Amend Ownership

If you’ve already undergone Dubai company registration with a local sponsor or agent, you can now amend your license and ownership structure to reflect 100% foreign ownership, provided your activity is on the permitted list.

This involves updating the company’s Memorandum of Association (MOA) and applying for an amendment through the DET.

How the New Rules Impact Company Registration in Dubai

The process to register a company in Dubai has become significantly more attractive for foreign investors due to these reforms. Here’s how the changes affect the Dubai company registration process:

1. Greater Flexibility in Business Setup

Foreign investors can now register mainland companies without needing to partner with an Emirati national. This gives them:

• Complete control over company decisions

• Full rights to profits

• Greater protection under international legal standards

It also reduces the need for complex contractual arrangements with local sponsors.

2. Simplified Licensing and Documentation

Without the need for a local sponsor or LSA, company registration in Dubai now requires fewer steps and legal documents. This has streamlined the process and reduced setup costs.

The general steps to register a company in Dubai include:

• Choosing a trade name and business activity

• Applying for initial approval

• Drafting and notarizing the MOA (reflecting 100% foreign ownership)

• Securing office space

• Applying for a trade license

• Obtaining additional permits if needed

3. Easier Expansion into Local Markets

Previously, free zone companies had to work through local agents or distributors to sell in the mainland. Now, foreign-owned mainland companies can freely operate across the UAE, deal directly with clients, and bid on government contracts, which are often restricted to mainland companies.

Choosing Between Mainland and Free Zone in the New Environment

While mainland Dubai now allows 100% foreign ownership for many activities, free zones still offer specific advantages depending on the nature of the business.

Entrepreneurs should consider factors such as target markets, costs, office requirements, and regulatory needs before choosing the right setup.

Important Considerations Before You Register a Company in Dubai

While the reforms have made it easier to set up fully foreign-owned companies in Dubai, you should still keep the following in mind:

• Check Activity Eligibility: Not all business activities are eligible for 100% ownership. Check the DET-approved list before applying.

• License Type: Your company license type (commercial, professional, or industrial) affects your documentation and registration process.

• Office Requirements: Mainland companies generally need a physical office address in Dubai. Virtual offices are not always permitted.

• Visa Allocation: Depending on your business size and office space, you will be granted a certain number of employee visas.

• Tax Registration: Businesses with turnover above AED 375,000 must register for VAT in the UAE.

Frequently Asked Questions

1. Can I now register a company in Dubai with 100% foreign ownership?
Yes, foreign investors can now fully own mainland companies in Dubai across many permitted business activities without needing a local partner or sponsor.

2. Do I still need to register in a free zone for 100% ownership?
No. While free zones continue to offer 100% ownership, you can now also register a company in Dubai mainland with full ownership in most sectors.

3. Can I convert my existing company to full foreign ownership?
Yes. Existing companies with local sponsors can apply to amend their license and ownership structure if their business activity is eligible under the new rules.

4. Are all business activities eligible for 100% foreign ownership?
No. Activities in strategic sectors like oil, gas, defense, and telecoms may still require local shareholding or special approvals.

Final Thoughts

The move to allow 100% foreign ownership in Dubai mainland is a landmark reform that enhances the emirate's appeal as a business destination. It brings Dubai's mainland more in line with its free zones, offering entrepreneurs and investors greater freedom, control, and opportunity.

If you’re considering company registration in Dubai, now is one of the most favorable times to do so. With streamlined rules, a supportive business environment, and full ownership rights, international investors can confidently register a company in Dubai and tap into one of the most dynamic markets in the world.