The United Arab Emirates has no plans to raise the 49 per cent foreign ownership limit for listed firms, said a senior economy ministry official, dashing hopes the country’s bourse would be upgraded to emerging market status.
Increasing foreign ownership limits was a key criteria set out by index compiler MSCI in its review of UAE and Qatar for an upgrade to emerging market status, which could open the door to more foreign investment. Banks such as HSBC say Qatar and the UAE could see inflows of $600 million in that event.
“The companies law, the new one, will maintain the same per centage in terms of ownership,” Mohammed Al-Shihhi, undersecretary at the economy ministry told reporters. “We have the free zones with 100 per cent ownership. At the moment there is no plan to change that,” he said on the sidelines of an investment conference. Though the foreign holdings limit is capped at about 49 per cent in the UAE, many strategic firms allow little or no non-UAE involvement.
Etisalat, the Middle East’s largest telecoms operator by value, is off limits to foreigners, while Dubai’s top bank Emirates NBD caps foreign involvement at 5 per cent. Qatar said last month it would not alter its foreign ownership limits.
UAE Economy Minister Sultan bin Saeed Al-Mansouri said in February that a new UAE companies law could be introduced before the end of 2011.
The companies law, which tackles a host of areas, was seen as potentially relaxing foreign ownership restrictions and also allowing full ownership in some sectors upon request. By UAE law, only nationals are allowed full ownership of companies operating outside of free zones. The law currently requires foreigners to have a UAE national as a partner or sponsor to conduct business.
The second-largest Arab economy has escaped the public protests that have erupted in nearby Bahrain, Oman and Yemen. It pledged to spend $1.6 billion in less-developed northern emirates, introduced bread and rice subsidies and hiked military pensions, among other measures. Shihhi also said the Opec member would launch an investment map to promote development, boost growth and reduce dependency on the oil sector across the emirates