Identifier
Created
Classification
Origin
04ABUDHABI3483
2004-10-04 10:37:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Abu Dhabi
Cable title:  

UAE DRAFT COMPANIES LAW WILL ALLOW GREATER THAN 49

Tags:  ECON EINV ETRO TC 
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Diana T Fritz 02/05/2007 05:22:39 PM From DB/Inbox: Search Results

Cable 
Text: 
 
 
UNCLAS ABU DHABI 03483

SIPDIS
CXABU:
 ACTION: ECON
 INFO: FCS P/M AMB DCM POL

DISSEMINATION: ECON
CHARGE: PROG

APPROVED: DCM: RALBRIGHT
DRAFTED: ECON: ACURTIS
CLEARED: ECON: OJOHN

VZCZCADI597
RR RUEHC RUEHDE RUCPDOC RUEHZM
DE RUEHAD #3483 2781037
ZNR UUUUU ZZH
R 041037Z OCT 04
FM AMEMBASSY ABU DHABI
TO RUEHC/SECSTATE WASHDC 6187
INFO RUEHDE/AMCONSUL DUBAI 4375
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHZM/GCC COLLECTIVE
UNCLAS ABU DHABI 003483 

SIPDIS

SENSITIVE

STATE FOR NEA/ARP
AMCONSUL DUBAI FOR MCARVER
STATE PASS USTR

E.O. 12958: DECL: N/A
TAGS: ECON EINV ETRO TC
SUBJECT: UAE DRAFT COMPANIES LAW WILL ALLOW GREATER THAN 49
PERCENT FOREIGN OWNERSHIP IF CONDITIONS ARE MET

UNCLAS ABU DHABI 003483

SIPDIS

SENSITIVE

STATE FOR NEA/ARP
AMCONSUL DUBAI FOR MCARVER
STATE PASS USTR

E.O. 12958: DECL: N/A
TAGS: ECON EINV ETRO TC
SUBJECT: UAE DRAFT COMPANIES LAW WILL ALLOW GREATER THAN 49
PERCENT FOREIGN OWNERSHIP IF CONDITIONS ARE MET


1. (SBU) Summary: If enacted in its current draft form, a
new UAE companies law will allow the Ministry of Economy
and Commerce to grant exceptions to the 51/49 percent
ownership requirement on a case-by-case basis. This
exception will allow U.S. and other foreign companies to
own more than 49 percent of a business venture in the UAE
if the company guarantees that it will employ a significant
number of UAE nationals. End summary.


2. (SBU) In a late September meeting with the Ministry of
Economy and Commerce, the Assistant Undersecretary for
Economic Affairs and International Cooperation told econoff
that a draft companies law includes a provision that will
grant foreign companies an exception to the 51/49 percent
ownership requirement, provided the foreign company
guarantees to the UAEG that it will hire a significant
number of Emirati nationals. According to a separate MOEC
official, the new law will establish a committee headed by
the Minister of Economy and Commerce that will review
applications from foreign companies to determine if their
proposal merits granting a waiver to the companies law.
(Note: Under the current companies law, a foreign company
must partner with an Emirati company in order to operate in
the UAE outside of the free zones, and at least 51 percent
of the business establishment must be owned by a UAE
national. This waiver would allow U.S. companies to own a
majority percentage of ventures in the UAE. End note.)


3. (SBU) The MOEC official noted that this law was first
drafted seven years ago, and that it has been moving slowly
through the process ever since. He stated that a committee
comprising Ministry officials, representatives from the
UAE's Federal National Committee (FNC),and legal advisors
from each of the seven emirates, was recently established
to study the draft and ensure that its provisions are not
outdated. If the committee determines that the law is
still appropriate at this time, the draft law will be
forwarded on to the FNC for review and approval.


4. (SBU) Comment: The provision of exempting the 40/51
percent foreign ownership is an attempt to address concerns
regarding the high unemployment rate among Emirati
nationals. UAE officials estimate that the unemployment
rate among nationals is 32 percent. As such, the UAEG has
embarked on an ambitious program of "Emiratization" that
encourages d in some sectors, requires ivate companies
to employ Emirati nationals. Although the Emiratization
program began in 1997, it has not been very effective to
date. End comment.

Sison