How to Transfer Company Shares in the UAE: Step-by-Step Guide

Transferring company shares in the UAE involves several legal and administrative steps, which vary slightly depending on the type of company (e.g., Mainland, Free Zone, or Offshore). Here’s a detailed guide:

1. Review the Company’s Memorandum of Association (MOA)

• Check the company’s MOA or Articles of Association for specific clauses regarding share transfers. It may include restrictions, such as obtaining approval from other shareholders or pre-emption rights.

2. Obtain Shareholder Approval

• Notify existing shareholders about the intention to transfer shares.
• Secure written consent from other shareholders if required (common in LLCs).

3. Draft a Share Transfer Agreement (STA)

• Prepare a Share Transfer Agreement detailing:
  • Names of the buyer and seller.
  • Number of shares being transferred.
  • Sale price and payment terms.
  • Effective date of transfer.
• Notarize the STA to formalize the transaction.

4. Valuation of Shares

• In some cases, especially for larger companies or disputes, a professional valuation of the shares may be required to determine their market value.

5. Update the Commercial Register

For Mainland Companies:

1. Submit the application for share transfer to the Department of Economic Development (DED).
2. Provide required documents:
   • Share Transfer Agreement.
   • MOA (updated with the new ownership structure).
   • Copies of passports and Emirates IDs of the new and existing shareholders.
   • NOC from the local sponsor, if applicable.
   • Proof of payment or consideration for the transfer.
3. Pay the applicable DED fees.
4. Obtain the updated trade license reflecting the new shareholders.

For Free Zone Companies:

1. Notify the Free Zone Authority about the intended transfer.
2. Provide the necessary documents (similar to those required by DED).
3. Submit an updated shareholding agreement.
4. Pay applicable fees, and obtain the amended license with updated ownership details.

6. Update the MOA

• Draft an amendment to the company’s MOA to reflect the change in shareholding.
• Obtain notarization of the amended MOA.

7. Notify Relevant Authorities

• Update the shareholder details with:
  • Federal Tax Authority (FTA): If the company is VAT-registered.
  • Any other regulatory bodies governing the company’s specific industry.

8. Finalize the Process

• Ensure all documents are approved and changes are reflected in official records, including the commercial license and share register.
• Issue updated share certificates to the new shareholders.

Key Considerations

1. Legal Restrictions:
   • Mainland companies may require a local sponsor or UAE national to retain a majority or specific shareholding, depending on the industry.
   • Free Zone companies often have more flexibility but must comply with the rules of their specific Free Zone.
2. Taxes:
   • No capital gains tax applies in the UAE, but ensure compliance with VAT rules if the company is VAT-registered.
3. Engage Legal Assistance:
   • Share transfers can involve complex documentation, especially for high-value transactions. Hiring a corporate legal consultant is advisable.

Costs Involved

• Notarization fees.
• DED or Free Zone Authority charges.
• Legal or consultancy fees.