Key takeaways
- A foreign company can be the shareholder of a UAE limited liability company (LLC): Article 71 of Federal Decree-Law No. 32 of 2021 says an LLC consists of "physical or juristic persons", between 2 and 50 of them, and allows one person to own the whole company.
- A foreign investor, whether an individual or a company, can own 100% of a mainland UAE company in most activities, because Federal Decree-Law No. 26 of 2020 removed the general requirement for a UAE national partner; activities the Cabinet treats as strategic, such as banking, insurance and telecommunications, remain restricted.
- A UAE free zone company can also have a corporate shareholder, but each free zone decides which legal forms accept a legal person and which documents it wants; Meydan Free Zone, for example, asks for notarised and attested incorporation documents (as of October 2026).
- A UAE company owned by another company must still name the real people behind it: Cabinet Decision No. 109 of 2023 treats anyone who owns or controls 25% or more, directly or through a chain of companies, as a beneficial owner, and registers must be updated within 15 days of a change.
- Foreign ownership does not change how a UAE company is taxed: its taxable income above AED 375,000 is taxed at 9% as of October 2026, and the FTA states the current withholding tax rate on certain UAE-sourced income paid to non-residents is 0%.
Can a foreign company own a UAE company?
Yes. UAE law lets a company, including one incorporated abroad, hold shares in a UAE LLC, and since the 2020 amendments to the Commercial Companies Law a mainland company no longer needs a UAE national partner for most activities.
Federal Decree-Law No. 26 of 2020 amended the old law to allow full foreign ownership of onshore companies, and Federal Decree-Law No. 32 of 2021 now sets the LLC rules. The official guidance on u.ae confirms that the Cabinet, not the emirates alone, decides which "strategic impact" activities carry ownership limits, so a plain consulting or trading activity is usually open while a bank is not. The counter-case: emirates still publish their own activity lists, so a licence in one emirate does not guarantee the same answer in another.
Which UAE company types can have a foreign company as shareholder?
A mainland LLC accepts a corporate shareholder by law; free zone companies depend on the free zone; a branch is a different thing, because the foreign company itself operates in the UAE rather than owning a separate company.
| Structure | Corporate shareholder allowed? | Number of owners | Where to confirm |
|---|---|---|---|
| Mainland LLC | Yes: "physical or juristic persons" (Article 71) | 1 to 50 | Federal Decree-Law No. 32 of 2021; the emirate's licensing department |
| Free zone company (FZ LLC or FZ Co) | Set by each free zone | Set by each free zone | The free zone authority's regulations |
| Free zone establishment (FZE) | Depends on the authority, which can distinguish natural from legal persons | 1 | The free zone authority |
| Branch of a foreign company | Not applicable: the foreign company is the licensee, not a shareholder | Not applicable | The licensing authority; u.ae notes existing companies may open free zone branches |
Checked October 2026. Because a branch has no separate legal personality of its own, its liabilities sit with the foreign company, which is why many groups prefer a subsidiary; the choice deserves legal advice.
What documents does a foreign corporate shareholder need?
Authorities want proof that the parent company exists and a record of the people who control it, and the exact list is set by the licensing authority, not by federal law.
Meydan Free Zone states that notarised and attested certificates of incorporation and Memorandum and Articles of Association are required for corporate shareholders (as of October 2026). Other authorities publish their own lists, so the order below is the one that avoids rework:
- Ask the licensing authority (the emirate's economic department on the mainland, or the free zone authority) for its written corporate shareholder checklist before you order anything.
- Obtain the parent's certificate of incorporation and constitutional documents, and ask the authority how they must be translated and attested.
- Ask whether a board resolution authorising the investment and naming a signatory is required.
- Draw an ownership chart from the parent down to the individuals who ultimately own or control it, because the beneficial owner register needs them.
- Submit the application through the authority's portal and keep a copy of every document filed, since you will need the same set for the bank.
Who is the ultimate beneficial owner when a company owns the company?
The beneficial owner is always a natural person: the individual who owns or finally controls the UAE company through 25% or more of the shares or voting rights, directly or through a chain of entities.
Cabinet Decision No. 109 of 2023 (dated 6 November 2023) sets the test, and the Hamriyah Free Zone Authority notes it applies to mainland entities and commercial free zones. Say a Singapore-registered parent owns 100% of a UAE LLC, and one individual owns 40% of that parent: that individual holds 40% indirectly and is a beneficial owner of the UAE company. If no individual reaches 25%, the decision treats a senior management officer as the beneficial owner (Article 5(6)).
| Item | Rule | Source |
|---|---|---|
| Threshold | 25% or more of shares or voting rights, direct or indirect | Cabinet Decision No. 109 of 2023, Article 5(1) |
| Fallback | A senior management officer is treated as the beneficial owner | Article 5(6) |
| Registers | A beneficial owner register and a partners or shareholders register | Articles 8 and 10 |
| Updates | Within 15 days of a change | Articles 8, 10 and 15 |
| Penalties | Escalate from a warning to fines and, for repeat breaches, possible licence action | Cabinet Decision No. 132 of 2023, dated 15 December 2023 |
If you'd rather not track these dates by hand, the free UAE compliance calendar lists them for your company.
25%: the ownership or voting share at which an individual becomes a beneficial owner of a UAE company, including through a chain of companies. Source: Cabinet Decision No. 109 of 2023, Article 5(1), checked 7 October 2026.
How is a UAE company with a foreign parent taxed?
A UAE company is taxed on its own results, whoever owns it: taxable income up to AED 375,000 is taxed at 0% and the excess at 9%, as of October 2026.
That rate structure comes from Federal Decree-Law No. 47 of 2022, Article 3, as set by Cabinet Decision No. 116 of 2022 (published 30 December 2022). On money moving to the parent, the FTA's guidance for non-resident persons says certain UAE-sourced income paid to non-residents may be subject to withholding tax under Article 45, and that the current rate is 0%. A Cabinet decision can change that rate, and your parent's home country will tax dividends under its own rules, so get advice in both places.
What most guides don't tell you about foreign corporate ownership
- The parent's paperwork is usually the slowest part. Translation and attestation requirements vary by authority and by the parent's country, so a document that is perfect at home can still be rejected; this is why the checklist comes before the attestation, not after.
- A share sale abroad can change your UAE register. Because the 25% test runs through the chain, a transfer of shares in the parent can create a new beneficial owner of the UAE company, and the 15 day update clock starts on the change. Tell your UAE team when the parent's cap table moves.
- Banks look through the structure too. A bank will ask about the individuals behind a corporate shareholder, so a chain through several layers of holding companies slows account opening even when the formation itself is approved. Keep the ownership chart current and the same across the licence, the register and the bank file.
- Check the activity before the structure. An activity that needs approval or an ownership cap under the strategic impact rules or an emirate list can force a different structure, so settle the licence activity first.
Which deadlines apply to your company?
A foreign shareholder adds registers, updates and tax dates to a UAE company's year, and missing one can trigger penalties. The free UAE compliance calendar is a calendar of your company's UAE tax and compliance deadlines, personalised from a few questions, as a PDF and calendar file.
Frequently asked questions
What is a Memorandum of Association and what should it include? The Memorandum of Association is the founding contract of a company: it records who the shareholders are, how many shares each holds and how the company is run. The exact contents differ between mainland and free zone companies, so use the template your licensing authority publishes.
Can I have multiple shareholders in a free zone company? Often yes, but the limit is set by each free zone and by the legal form you pick, so confirm it with the free zone before you apply. A mainland LLC can have between 2 and 50 shareholders under Article 71 of Federal Decree-Law No. 32 of 2021, or a single shareholder.
How do I set up a holding company in the UAE? A UAE holding company is an ordinary company, either a mainland LLC or a free zone company, whose licensed activity is holding shares; whether your chosen authority licenses that activity is something to confirm first. On tax, the FTA treats a dividend received from a UAE resident company as exempt income for corporate tax, with no further conditions.
What is the best structure for a family business in the UAE? There is no single best structure; it depends on succession plans, liability, and whether outside investors will come in later. Many families hold the operating companies through a holding company, but get legal advice on inheritance and succession before you decide.
About Qawi · Qawi is a corporate services firm licensed in the Sharjah Media City (SHAMS) free zone, handling company formation, visas and PRO, bookkeeping, VAT and corporate tax for UAE businesses. Guides are researched from FTA, Ministry of Finance and free zone sources. Qawi on LinkedIn
Sources
- Federal Decree-Law No. 32 of 2021 on Commercial Companies, English text (Article 71)
- u.ae: Full foreign ownership of commercial companies
- u.ae: Starting a business in a free zone
- Cabinet Decision No. 109 of 2023 Regulating the Real Beneficiary Procedures, UAE Legislation portal
- Cabinet Decision No. 132 of 2023 on administrative penalties, English text
- Hamriyah Free Zone Authority: UBO update
- Meydan Free Zone: documents required
- Ministry of Finance: Cabinet Decision No. 116 of 2022 (Article 3 threshold)
- Ministry of Finance: Corporate Tax in the UAE
- FTA: Corporate Tax Guide for taxable non-resident persons
- FTA: Exempt income, dividends and participation exemption
Last checked: 07 October 2026
General information, not tax or legal advice for your specific situation.