Unlikely that current FNC will handle foreign ownership law

Proposed companies investment law may not be heard by current session, and could be resisted for fear of competition.

FNC member Ali Al Nuaimi (Ajman) says the companies full foreign ownership bill needs careful debate and the Ministry of Economy will need strong reasons to convince members. Fatima Al Marzooqi / The Show more

ABU DHABI // An anticipated investment law that promises to allow full foreign ownership of companies will probably not go before the current Federal National Council.

Sultan Al Mansouri, Minister of Economy, said on Monday that a bill allowing 100 per cent foreign ownership of companies outside free zones in certain sectors was a step closer to being approved.

But with less than three months until the end of this FNC year and legislative chapter, a new council is expected to review the bill. The FNC has the right to approve, amend or refuse bills.

While bills are discussed by the FNC in the presence of a minister of the government body sponsoring the legislation, the council has the final say on what should be added or removed, after listening to the minister’s opinion.

The legislation can also be passed straight to the President, Sheikh Khalifa, without going through the FNC. This would happen if the bill reached the council while it was in recess, as it will be from June until the new council convenes in October or November.

Ali Al Nuaimi (Ajman), deputy of the council’s finance committee, said the FNC would debate the legislation with caution. While he was initially in favour of a law encouraging investment, he said he foresaw objections from his peers.

In 2013 when the idea was first floated in a clause added to the Companies Law, some FNC members objected, and a majority of the council voted to strip out the provision.

The FNC also made changes to that law to ensure that Emiratis were still in control of companies by holding majority board seats in publicly-held companies. It also obliged companies to hire an Emirati service agent.

Mr Al Nuaimi said the Ministry of Economy needed to present strong reasons for a foreign investment bill in order to convince council members.

“I think the foreign investment law would help the country’s economy in some sectors,” he said. “We would also benefit from foreign expertise.

“We would need to study the law. We cannot close our eyes and ears and say ‘no’ to it without study.”

He said objections would probably be because of fear that full foreign ownership in a tax-free country would create competition for local investors, or other companies that supported Emiratis.

“Therefore, to protect these companies in the country, there may be objection over the bill,” he said.

“But still, members need to study this. We need to see how we can ensure that the country’s economy would benefit while not harming investors.

“Without a doubt, we encourage foreign investment, but not at the expense of local investors. If [members] understood that this law was to the benefit of the country’s economy, then why would they not pass it?”

Mr Al Nuaimi stressed that the law was important and there was a need for reciprocal laws with certain countries who did allow full foreign ownership. He said this should be brought to the council’s attention, to win members’ votes.

“Initially, I am in favour of such a law, but under certain conditions and certain study. Not blindly,” he said.

Mosabeh Al Kitbi (Sharjah), who has no reservations about the bill, said he did not expect it to be discussed in the current FNC.

Gharib Al Saridi (Fujairah) said such a law meant members would need to speak to local investors to get their opinions on the subject.