UAE Free Zone Company Shareholder Agreement — What to Include 2026
When two or more people set up a UAE free zone company together, a shareholder agreement (SHA) is essential protection. Here is the 2026 guide on what to include.
What Is a Shareholder Agreement?
A shareholder agreement (SHA) is a private contract between the company shareholders governing their rights and obligations. It is separate from the Memorandum of Association (MOA), which is a public document filed with the free zone.
Why a SHA Is Important for UAE Free Zone Co-founders
- The MOA is a public document with limited governance provisions
- The SHA allows detailed private rules tailored to your specific situation
- Without a SHA, disputes between co-founders fall back on general UAE company law principles
- A well-drafted SHA can prevent costly disputes from ever reaching court or arbitration
Key Clauses in a UAE Free Zone Shareholder Agreement
1. Share Split and Ownership
Confirm the exact percentage split (e.g., 60/40, 50/50) and any future dilution provisions for new investors.
2. Decision Making (Voting Rights)
Define which decisions require unanimous consent (e.g., major asset sale, company dissolution) vs simple majority, vs board decision.
3. Dividend Policy
How will profits be distributed? When? As salary, dividend, or a mix?
4. Non-Compete
Can a departing shareholder immediately start a competing business in UAE?
5. Exit Provisions (Buy-Sell / Drag-Along / Tag-Along)
- Right of first refusal: Existing shareholders get first option to buy a departing shareholder shares
- Drag-along: Majority shareholders can force minority to sell to a third-party buyer
- Tag-along: Minority shareholders can require their shares to be included in any sale of majority shares
6. Dispute Resolution
How will disputes be resolved? UAE courts? DIAC arbitration? ICC arbitration? Defining this in advance is critical.
Governing Law for UAE SHA
A UAE free zone SHA can be governed by:
- UAE law (DIFC law or UAE federal civil law)
- English law (common choice for international founders)
- Any other agreed law
DIFC-seated SHAs with English law are popular for international founders doing business in UAE.