Insurance House has agreed to raise the cap on foreign ownership in the business to 25 per cent just days after its public listing.
The move by the Abu Dhabi insurance company comes as firms seek to help the UAE gain "emerging-market" status from the index provider MSCI.
"We will give an opportunity to foreign investors to participate in our promising venture by building a successful and established relation with them," said Mohammed Alqubaisi, the chairman of Insurance House.
Insurance House's shareholders approved the increase in the foreign-ownership limit during an extraordinary general meeting.
That move followed the firm listing its shares on the Abu Dhabi Securities Exchange (ADX) last Monday. MSCI last week delayed until December a decision on whether to upgrade the UAE to "emerging-market" status from "frontier market".
An upgrade could spur an increase in international investment in companies in the Emirates.
Tight limits on foreign ownership in listed UAE companies has remained a barrier to an upgrade to emerging-market status.
Raising the limits was one of several requirements outlined by MSCI in its review of the country's markets. The limit for foreign ownership of listed companies is 49 per cent.
Insurance House's step follows a similar move by First Gulf Bank last week. The UAE's second-biggest bank by market capitalisation voted to increase foreign ownership limits from 15 per cent to 25 per cent.
"What started with First Gulf Bank may well now continue," said Haissam Arabi, the chief executive of Gulfmena Alternative Investments. "A lot of companies will be looking to increase visibility on their stock and get additional attention by increasing foreign ownership limits."
But while an opening up to foreign ownership by smaller companies such as Insurance House is viewed as an important step, allowing more foreign investment in large listed companies such as the telecommunications giant Etisalat is still required, say analysts.
As it stands, non-Gulf foreigners make up 3.31 per cent of ownership on UAE markets, with holdings of Dh12.4 billion (US$3.37bn), while UAE nationals hold 91.5 per cent of equities, according to research by Al Ramz Securities. The remainder is held by other Gulf nationals.
Insurance House's decision was not unexpected. Last month, the firm's main shareholder, Finance House, said it had decided to offer 20 per cent of its shares to foreign owners.
Also last month, Insurance House raised Dh66 million when it sold 55 per cent of its shares to the public, but it barely met the capital requirements to list on the ADX. The share issue was open only to UAE nationals at a minimum subscription of 25,000 shares per investor.
Insurance House offers insurance services to businesses and individuals from its head office in Abu Dhabi and branches in Dubai and Sharjah. It has a paid-up capital of Dh120m.
In an announcement on Tuesday, the MSCI cited the country's limits on foreign ownership in listed companies and lack of experience with a key settlement system as the top reasons for deferring until December a decision about raising the UAE's status.