Regulation of Private M&A in the UAE

Interested in concluding an M&A deal in the UAE? Looking for information on regulation of M&A deals in Dubai? If you are, then what follows below will definitely be of interest to you.

UAE: Structure of Private M&A

The most popular way of purchasing private companies in the UAE consists in purchasing their shares. Asset acquisition is resorted to less frequently. It’s also worth noting that registered companies in the UAE may also be purchased via a merger; however, such a procedure isn’t as popular as the transferring of shares.

The major advantage to buying shares lies in the fact that it simply involves the transferring of ownership to new owners. Another big plus is that sellers needn’t transfer private companies’ assets & liabilities because they’re transferred automatically. 

However, if you intend to acquire a company in the Emirates in such a way, you should keep in mind that doing so will require compliance with the UAE’s regulatory approval.

Buying shares doesn’t necessarily mean that any asset & liability is transferable. An exception to this rule is cases where a possibility like this is specifically agreed upon in respective sales documentation. Hence, success or failure of M&A deals in the Emirates is pivotal on a properly drafted contract.

Concluding transactions involving the purchase of stakes requires signing an SPA containing preconditions & closing mechanisms. Going through with such a deal requires stakeholders to come up with documentation on the transferring of stakes & modify the company's charter. The transferring of ownership occurs by updating a company's license or commercial registers.

UAE: Regulatory Framework for M&A Deals

Those considering opening a company in the UAE should keep in mind that:

• the majority of UAE-registered companies are regulated by the CCL which contains requirements for M&A transactions;
• PJSs get regulated as per Decree #539 which contains requirements for the purchasing of stakes in JSCs in the Emirates;
• industry-specifc regulations can also affect M&A transactions.
• Corporate entities registered in free-trade zones aren’t always regulated by the CCL. 

Governing laws of other countries may be specified in contracts on the selling of shares. Parties can conclude contracts; an exception is made for public policy or specific binding issues.

Conclusion