THE WHAT? The United Arab Emirates has scrapped a rule that required companies operating in the country to have Emirate shareholders, according to an article published by Bloomberg citing reports in local press.
THE DETAILS The amended 2015 commercial companies law, which came into force yesterday, will no longer require companies to be chaired by an Emirati national or for the board to be majority Emirati. However, local authorities can set specific targets for Emiratis in capital allocation and boards.
“This was always a sensitive topic given the easy ‘rents’ derived by locals for their passports,” Tarek Fadlallah, CEO of Nomura Asset Management’s Middle Eastern division told Bloomberg. “Passing it is potentially a big moment.”
THE WHY? The measure is designed to attract foreign investors and diversify the Gulf economy amid the downturn caused by COVID-19’s catastrophic effect on oil prices.