The United Arab Emirates cabinet has approved a draft companies law that may allow foreign ownership above 49 percent, state news agency Wam reported, as the country  seeks to attract more investment to help diversify its economy.

The law allows the cabinet to specify the types of businesses and sectors where a foreign partner may hold more than 49 percent of a company's capital, Wam said.   

Currently, there is a maximum 49 percent 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.'    

The legislation lays down a framework for the governance of public companies, ensuring transparency and disclosure of financial data as well as the efficiency and integrity of the board of directors, Wam said.   

The agency did not say when the legislation, which is also expected to make it easier to set up businesses and strengthen the protection of shareholders, was expected to take effect.

The UAE has been trying to diversify and modernise its economy, developing areas including tourism, finance and aerospace, to reduce its heavy dependence on oil exports. - Reuters