Liberalised, not uniform
Foreign ownership restrictions across the GCC have been relaxed considerably. Full foreign ownership is now permitted for many activities in several jurisdictions, and financial free zones have operated on that basis from the start. What has not happened is uniformity: restrictions persist by sector, by activity, and by jurisdiction, and the detail changes.
The practical consequence is that ownership structure remains a legal question to be answered per transaction rather than a settled market convention.
What determines the structure
The activity, not the company. Permission usually attaches to the licensed activity rather than to the entity. A group performing several activities may find one of them restricted, which shapes whether they can sit in the same vehicle.
Onshore or free zone. A free zone entity may own and operate within the zone and, increasingly, outside it — subject to conditions. An onshore entity operates without those constraints but may face ownership limits. Where an asset must be held onshore, the structure works within onshore rules regardless of investor preference.
Real property. Land and property ownership follows its own rules, with designated areas where foreign freehold is permitted and others where it is not. A structure that works for an operating business may not work for the land beneath it.
Sector-specific regimes. Regulated sectors — financial services, telecoms, defence-related activity — carry their own ownership and approval requirements that override general liberalisation.
Arrangements to avoid
Historically, restrictions were worked around with nominee arrangements and side agreements that gave economic control to a foreign party while nominal ownership sat elsewhere. These structures carry real enforceability risk and, in several jurisdictions, regulatory risk as well. Where liberalisation now permits direct ownership, inherited nominee structures should be reviewed and unwound rather than maintained out of habit.
Verification before structuring
- Confirm the licensed activity and the ownership position that attaches to it, in the specific jurisdiction
- Establish whether the asset must be held onshore or can sit in a free zone
- Check real property separately from operating assets
- Identify any sector approval that supersedes the general position
- Review inherited structures against current rules rather than the rules when they were built
The rules have moved in investors' favour. The mistake now is assuming they have moved further than they have, or that what applies in one Gulf market applies in the next.
