The UAE continues to lead the regional market in terms of volume and value, however, the investor confidence in regional private equity firms lowered the past year.
Thinking to acquire a company in the United Arab Emirates? The best way to do it will be to buy company shares. The purchase of assets is not regulated or automatically transferred. It is also possible to acquire a private company from the UAE through a merger.
Purchase of shares of a private company in the Emirates
Such a transaction implies that the ownership of the shares simply passes to the new owner. The transfer must be approved by the UAE authorities.
A typical transaction to buy shares in an Arab company would involve entering into a sale/purchase agreement for the shares in the Emirates with preconditions and a plan to complete the transaction.
Purchases of assets in the UAE
This deal has its advantages. The biggest advantage is that the assets and liabilities to buy are selectable. But there are also significant drawbacks: it can take significant time and effort to register individual asset transfers. If only part of the assets is transferred, this will be done through the conclusion of an agreement on the transfer of assets in the UAE.
One can set up a company in the United Arab Emirates:
- in the Free Zone; or
- on the mainland.
Free zones are specially designated territories created to attract foreign investment. Company registration in the UAE Free Zone is regulated by the Free Zone Authorities which have comprehensive regulatory powers. Foreign laws may apply to share purchase agreements.
On the mainland, private acquisitions are usually carried out by LLCs, public, and private JSC.
In both continental companies and some free zone companies, the transfer of shares is not completed until the license is renewed.
Acquisition of legal title to the shares of a UAE company
Upon entering into such a transaction, the buyer usually acquires voting rights, rights to profits, and proceeds from the liquidation/sale in proportion to his share.
Sale of LLC in the UAE
There is an essential caveat to this transaction: the sale must be approved by all sellers, and all shareholders must sign such a document.
The Emirates offers great opportunities for both investors and global businesses. However, Arabic culture is part of everyday life here and it has a great impact on doing business in this fascinating country. Therefore, the consultation of a specialized specialist is required to analyze legal risks and effectively conduct transactions. Our team advises its clients on corporate law in the United Arab Emirates, provides support for M&A transactions in the Emirates. With our established connections in developed world jurisdictions, we offer a full range of services, including corporate law, mergers and acquisitions, private equity, equity capital markets, corporate governance. You can order a consultation at the contacts indicated on the website.