Navigating the Evolution: Insights into Foreign Ownership Changes in the UAE Healthcare Industry
Healthcare & Life Sciences Focus
Ali BachrouchPartner, Head of Corporate Structuring - Northern Emirates
Gretta HabibSenior Associate,Corporate Structuring
In recent years, the United Arab Emirates (UAE) has undergone a transformative journey, implementing substantial legal and regulatory reforms to embrace foreign investment and expertise in its healthcare sector. This article delves into the comprehensive changes in foreign ownership regulations, exploring the nuances across various healthcare segments, including hospitals, medical manufacturing facilities, and drugstores.
Traditionally, the UAE imposed strict limitations on foreign ownership in the healthcare sector. However, the pivotal moment came with the issuance of Cabinet Decision No. 17 of 2023 (the “New Law”) introducing new executive regulations. This amended some provisions of Cabinet Decision No. 29 of 2020 (the “Old Law”) pertaining to healthcare facilities to complement Federal Law No. 4 of 2015 regarding private health facilities. The significant change is the removal of the requirement for private health facilities to be owned by UAE nationals.
Foreign ownership is now permitted under certain conditions outlined in the newly introduced Article (6) of the Cabinet Decision No. 17 of 2023, signifying a departure from stringent foreign ownership restrictions and embracing a more open approach to investment in the healthcare sector.
Clause (5) of Article (6) of the Old Law, as amended by the New Law, has granted corporate entities the right to own private healthcare facilities, subject to the ownership requirements set forth in the Federal Decree Law No. (32) of 2021. The landmark of the Federal Decree of 2021 reforms lifted restrictions on foreign investment regimes, enabling foreign investors to wholly own local companies, subject to Federal restrictions protecting strategic sectors.
Private healthcare facilities must operate under a licence granted either by their respective governing regulator, whether the Dubai Health Authority (DHA) in Dubai, the Department of Health in Abu Dhabi (DOH), or by the Ministry of Health and Prevention (MOHAP) in the Northern Emirates.
Healthcare regulatory authorities, including the UAE Ministry of Health and Prevention and the Departments of Health, have established regulatory procedures allowing for 100% foreign ownership of healthcare facilities. This contrasts the former requirement that the facility license must be issued in the name of a UAE national person rather than a corporate entity.
This requirement has been waived, allowing for 100% foreign ownership of the facility license with regulatory approval.
Nonetheless, applicants must adhere to local standards and undergo thorough inspections during development or refurbishment of their respective healthcare facility.
Traditionally, the UAE imposed strict limitations on foreign ownership in the hospital sector. However, the regulatory landscape shifted significantly with the new legal framework governing the healthcare industry in the UAE, allowing foreign investors to fully own hospitals. This change not only stimulated the establishment of new healthcare institutions but also facilitated the infusion of advanced medical technologies and global best practices.
The medical manufacturing segment witnessed a strategic overhaul, welcoming foreign investors to fully own and operate facilities. This shift aims to enhance domestic production capabilities, fostering self-sufficiency in the manufacturing of medical equipment, devices, and pharmaceuticals.
In the realm of retail healthcare, foreign investors are now permitted to fully own and operate drugstores. This change has introduced diversity into the market, expanding the range of pharmaceutical products and services, increased competition benefits for consumers by providing more choices and improving accessibility to healthcare essentials. It is important to note that, nonetheless, medical agency companies must be 100% owned by Emiratis to qualify for registration at the UAE Ministry of Economy.
Foreign investors can fully own hospitals, fostering advanced technologies and global best practices.
Beyond ownership changes, the UAE government has worked to streamline licensing processes for foreign-owned healthcare entities, creating a more investor-friendly environment. This includes simplifying application procedures and reducing bureaucratic hurdles.
Eased Ownership Restrictions: The amendment to foreign ownership laws has enabled international investors to establish and wholly own healthcare facilities in the UAE, encouraging the establishment of new hospitals, clinics, and medical centres with full foreign ownership.
Streamlined Licensing Processes: The UAE government has taken steps to streamline the licensing processes for foreign-owned healthcare entities, fostering a more investor-friendly environment.
Encouraging Public-Private Partnerships (PPPs): The legal changes have paved the way for increased participation of foreign investors in public-private partnerships within the healthcare sector, aiming to enhance the quality of healthcare services and contribute to the overall development of the healthcare infrastructure.
Investor Protections: The legal framework includes provisions to protect the rights and interests of foreign investors, incorporating mechanisms for dispute resolution to ensure a fair and transparent business environment.
Despite the positive strides in liberalizing foreign ownership, investors must navigate challenges such as compliance with local regulations, adherence to healthcare standards, and cultural sensitivities. Continuous vigilance and adaptability to evolving regulatory frameworks are imperative for sustained growth and stability.
The UAE's proactive stance in liberalizing foreign ownership restrictions across various healthcare segments underscores its commitment to becoming a global healthcare hub. By attracting international investors and fostering innovation, the UAE aims to enhance the quality of healthcare services and position itself as a leader in the industry. As foreign investors explore opportunities in hospitals, medical manufacturing facilities and drugstores, a strategic and informed approach to compliance and collaboration will be essential for mutual success and the continued transformation of the healthcare landscape in the UAE.
For further information,please contact Ali Bachrouch & Gretta Habib.
Published in January 2025
