UNITED ARAB EMIRATES Law and Practice Contributed by: Yasser Omar and Laryssa Perkins, Hadef & Partners LLC
2. Recent Developments and Market Trends 2.1 Current Economic, Political and Business Climate The UAE has witnessed a significant influx of financial institutions and high net worth individuals relocating their operations to the region. According to the World Investment Report 2025 by the United Nations Con - ference on Trade and Development, the UAE ranked second globally after the United States in the number of greenfield foreign direct investment (FDI) announce - ments in 2024. This growth has been supported by the UAE’s efforts to diversify and modernise its economy including the approval of the National Investment Strategy 2031 in March 2025, which aims to more than double FDI from AED112 billion in 2023 to AED240 billion by 2031. Foreign ownership reforms have ena - bled foreigners to own and control mainland entities which can operate across the UAE (outside the free zones) albeit certain activities require a minimum UAE shareholding. The UAE has also implemented measures that sup - ported the removal of the UAE from enhanced moni - toring under the Financial Action Task Force (FATF), the global money laundering and terrorist financing watchdog, on 23 February 2024. The UAE is to pre - pare for the FATF’s fifth round of mutual evaluations, which is expected to begin in 2026. The UAE introduced a federal corporate tax regime applicable to juridical persons and certain individu - als who conduct a business activity in the UAE (other than exempt persons) for tax periods starting on or after 1 June 2023. The first corporate tax filings were due in September 2025. It will therefore be interesting to observe the impact the introduction of a corporate tax regime has on foreign investment in the UAE and the way businesses are structured moving forward.
• Quran centres; and • services related to fisheries.
There are also restrictions on the ownership of real property in certain designated areas according to the
relevant property law. Free Zone Companies
Free zones are specially designated areas in the UAE established to attract foreign investment by encourag - ing companies to set up businesses and locate their operations there. Accordingly, the ability for 100% foreign ownership in free zones has historically been one of the key features of free zones. Free zones have therefore been the primary forum in which foreign investors conduct commercial activities in the UAE. While the activities for a company incorporated in a free zone are generally restricted to permitted busi - ness activities within that free zone as per the law establishing the free zone and its authority, recent changes have begun to blur this distinction. Notably, pursuant to Dubai Executive Council Decision No 11/2025 Concerning the Regulation of Free Zone Enti - ties’ Operation of Their Activities Within the Emirate of Dubai, which came into effect in March 2025, certain companies registered in Dubai’s free zones may now operate on the Dubai mainland by obtaining a licence from the Dubai Department of Economy and Tourism. Furthermore, the 2025 CCL Amendment Law has also clarified that free zone companies can operate outside the boundaries of that zone within the UAE through the establishment of a mainland branch or representa - tive office. Sector-Specific Depending on the nature of the business activity, an authority that regulates the activity (other than the licensing authority) may require a certain minimum percentage of UAE shareholding such as the Central Bank of the UAE (CBUAE) which requires, pursuant to Article 71 (1) of Federal Decree-Law No 6 of 2025 Concerning the Central Bank and the Regulation of Financial Institutions, Activities and Insurance Busi - ness, a minimum of 60% UAE shareholding in banks incorporated in the UAE mainland.
3. Mergers and Acquisitions 3.1 Transaction Structures
In the UAE, the structure for a merger and acquisition (M&A) involving a UAE target will typically be driven by factors such as the corporate structure of the target
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