Introduction
On 31/10/2005 the UAE Cabinet issued decision no. 23/2005 amending their decision no. 9 of 2004, allowing GCC nationals to buy and trade in shares of Joint Stock Companies in the UAE. The decision (amended Article (1) of decision no. 9 of 2004), takes into consideration the reciprocity principle, and permits GCC nationals natural or legal person to do the following:
1. Establish new companies that can operate in economic fields and to participate in its establishment (i.e. partnership), subscribe to their shares and trade in the same;
2. Own and trade in shares in the existing joint stock companies operating in economic fields.
The Emirates of Dubai and Sharjah have also allowed GCC nationals to establish and own companies 100% in those emirates. In addition, it is now permitted for GCC companies, 100% owned by GCC nationals, to open a branch in any of the emirates to carry on the same activities of the parent company or promote the sale of their goods in the case of a GCC manufacturing facility.
The Ministerial Cabinet in its decision no. (6) of 2004 prepared a list of the activities and economic profession that GCC citizens cannot or are not allowed to conduct it:
1. Haj and Umia Services;
2. Labor recruitment and national employment offices;
3. Insurance Services;
4. Commercial agencies;
5. Follow up with Government Department services;
6. Real Estate services, land building rental and re-renting and managing;
7. The following social activities:
Special Center for the care of the disabled;
Special Center for the rehabilitation of the disabled;
pecial Center and Club for the;care of the aged
Public services center;
8. The following cultural activities:
Printing or Publication;
Publishing of Newspapers and Magazines;
Setting up of studios for photography and video and technical production;
Forming commercial play groups;
Forming cinema group in countries which permit the same;
Setting up stages for holding of plays;
Setting up of halls for holding technical exhibitions;
9. Car Rental;
10. Transport Services.
However, there are some practical issues that should be taken into consideration. It is important to note that GCC companies cannot sponsor other companies or individuals in the UAE.
A company would be regarded and treated as a UAE company if a GCC company enters into a partnership with a UAE national to establish the company in the UAE.
On the other hand, a GCC company or individual cannot establish an entity with a foreign investor without a UAE national or UAE company participating in the shareholding.
This new decision will help stabilize the UAE's market and attract higher foreign investment into its stock markets.
Foreign investors are important to the UAE's economy and the UAE Ministry of Economy and Planning and the Emirates Securities Commodities Authority are encouraging and pushing for a unified trading platform, publication of financial results and a listing of all stock companies.
By Bassem Zein El Dine
© Al Tamimi & Company 2006
