A draft companies law in the UAE, which is expected to allow higher foreign ownership ratios in companies, will boost the creation of new businesses in Dubai, the head of the emirate's chamber of commerce said on Tuesday.

The bill, which has been approved by the cabinet, will allow the cabinet to specify types of businesses and sectors where a foreign partner may hold more than 49 per cent of a company's capital, state news agency WAM said on Sunday.

The legislation also lays down a framework for the governance of public companies in areas such as disclosure of financial data. WAM did not say when the bill was likely to receive final approvals and take effect.

Currently, there is a maximum 49 per cent ownership limit for listed companies, and foreigners need a UAE national or partner to conduct business, although full foreign ownership is permitted in "free zones."

"We believe that the law will support the establishment of businesses in Dubai," Hamad Buamim, director general of the Dubai Chamber of Commerce and Industry, told Reuters on the sidelines of a business forum.

"It will make the regulations and business environment better. It will improve the ranking of doing business in Dubai and the United Arab Emirates."

The World Bank's annual "Doing Business" 2012 report, which ranks 183 countries according to the ease of doing business, placed the UAE in 33rd place, up from 35th in 2011.

"The impact will not happen overnight, but I think it will affect the psychology of investors that the government is putting the best practices into place," Buamim said.

Dubai, a logistics and trading hub for the Gulf, accounts for around 80 percent of the UAE's non-oil trade and 28 percent of its economic output.

At the beginning of the year, the emirate's real gross domestic product growth was forecast to reach 4 to 5 percent in 2011, Buamim said, and between 5 and 6 percent in 2012. He indicated these estimates could be revised because of a weaker global economic outlook.

"We are reviewing our forecasts for this year and 2012 because of what is happening in the euro zone and United States," he said.

The chamber, established in 1965, counts 129,000 members; 9,000 companies joined in 2011, Buamim said.

He also said the UAE was working on a new law covering foreign direct investment in the country and that he hoped it would come into effect in 2012, but added that he had not yet received concrete details. – Reuters