What Changed in 2021
Prior to 2021, most UAE mainland commercial companies required a UAE national shareholder holding 51% of shares — a Local Service Agent or Emirati partner. This was one of the most significant structural differences between mainland and freezone entities, and it drove many foreign investors towards freezones despite their trading limitations.
In June 2021, the UAE enacted Federal Decree-Law No. 32 of 2021 (the new Commercial Companies Law), which came into effect on 2 January 2022. The landmark change: 100% foreign ownership is now permitted on the UAE mainland for most commercial and professional activities without any requirement for a UAE national shareholder.
What Is Still Restricted?
Not all activities are open to full foreign ownership. The UAE Cabinet maintains a Strategic Activities List — a specific set of activities in sectors considered strategically sensitive — where UAE national ownership requirements remain.
Restricted sectors broadly include:
- Certain oil, gas, and energy activities
- Defence and security-related activities
- Regulated financial services (specific categories)
- Certain media and publishing activities
- Activities related to Islamic Affairs
For restricted activities, a UAE national partner holding the legally required ownership percentage remains mandatory. The specific restriction and required local ownership percentage varies by activity.
What About the Local Service Agent?
For professional licences on the mainland (consultancy, advisory, professional services), a UAE national Local Service Agent (LSA) was previously required — not as a shareholder, but as a registered service agent. The LSA had no ownership interest but was required for certain government filings.
Post-2021, the LSA requirement has been removed for most professional licence activities. Foreign professionals can now hold a professional licence in their own name without any UAE national involvement.
How to Verify Eligibility for Your Activity
Eligibility for 100% foreign ownership depends on the specific DED activity code you intend to register. The process:
- Identify your intended activity code(s) against the relevant emirate's DED activity list
- Cross-reference against the current Strategic Activities List published by the UAE Cabinet
- For grey areas or dual-use activities, seek confirmation from the DED before committing to a structure
Amara verifies ownership eligibility for every client's proposed activity set as part of the scoping process. This confirmation is documented before incorporation proceeds.
Practical Implications
The change means that for the vast majority of foreign investors, the mainland is now a genuinely viable option without the complexity and cost of a UAE national partner arrangement. It also means:
- No profit sharing with a national partner who had no operational role
- Full control over governance, management, and strategic decisions
- Simpler shareholder agreements — no need to manage a nominal local partner relationship
- More straightforward banking — banks no longer see a nominal local partner as a risk indicator
The practical decision between mainland and freezone is now driven primarily by market access (do you need to trade directly in the UAE?) and corporate tax positioning — not ownership structure.