02/04/2015 04:22 AST

The United Arab Emirates has issued a long-awaited companies law that loosens rules covering stock market flotations and aims to attract more investment by moving corporate regulation closer to international standards.

Officials had discussed the law for at least six years and it went through multiple drafts as the Arab world’s second-biggest economy balanced its desire to attract more foreign capital with protecting local business interests.

The law reduces the minimum “free float” of shares in company flotations on the UAE’s two main stock markets to 30% from 55%, aiming to encourage company owners to go public, state news agency WAM reported yesterday.

Previously, they could only sell less than 55% of their firms if they had obtained a waiver from regulators or by listing on the smaller NASDAQ Dubai.

Company owners will also for the first time be able to carry out floats by selling existing shares, rather than by issuing new equity. And flotation prices will be allowed to be set by book-building, or obtaining indicative bids from fund managers, rather than through a fixed-price evaluation method.

The new law also contains dozens of articles seeking to make limited liability and joint stock firms simpler to manage and more attractive to investors, while strengthening corporate governance in areas such as company loans to directors.

A late draft of the law seen by Reuters last year provided for companies’ documentation to be made publicly available, a step towards a more transparent corporate environment. WAM did not say whether this provision was included in the final version of the law.

The law is less radical than some had hoped. Foreigners generally cannot own more than 49% of any UAE company, unless it is incorporated in a special “free zone”. Officials had at one stage intended to use the companies law to ease that rule, but the reform was scrapped under political pressure.

Earlier this week, however, economy minister Sultan bin Saeed al-Mansouri said the UAE was at an advanced stage of drafting a foreign investment law that would allow 100% foreign ownership of businesses in some sectors.

He did not specify the sectors or say when the law might be passed.


Reuters

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