Mergers and acquisitions (M&A) in the UAE free zones involve legal, regulatory, and tax considerations that differ from Western jurisdictions. Here is a practical guide for buyers and sellers.
UAE M&A Deal Structures
Share Purchase (Share Transfer): The buyer acquires shares in the target UAE free zone company. The company continues to exist with all its contracts, licences, and liabilities intact. Most common structure for UAE M&A — simpler and avoids contract novation. Requires free zone authority approval for share transfer. Asset Purchase: The buyer acquires specific assets (contracts, equipment, brand, employees) from the seller without acquiring the company entity itself. More complex but allows the buyer to cherry-pick assets and exclude liabilities. Requires novation of contracts and re-issuance of licences/permits.
UAE M&A Due Diligence Checklist
- Verify trade licence validity and activities match actual business
- Review MOA and shareholder agreement for transfer restrictions
- Check for any pending litigation or regulatory actions
- Review all material contracts for change-of-control clauses (many UAE contracts allow counterparties to terminate on a change of ownership)
- Verify UBO register is current and accurate
- Review UAE Corporate Tax position (deferred liabilities, open assessments)
- Verify employee contracts comply with UAE Labour Law
- Check for pending WPS violations or MOHRE fines
Free Zone Approval for Share Transfer
Most UAE free zones require explicit approval before a share transfer can be completed. Submit to the free zone: shareholder resolution approving the transfer, share transfer agreement, KYC documents of the incoming buyer, and updated shareholder register. Processing: 5–20 working days depending on the free zone. DMCC has a dedicated M&A team for complex transactions.