When you form your business, you choose a legal structure that checks all the boxes. However, the shareholder structure that seems most suitable for your business today may not meet your business needs tomorrow and you might decide to change shareholders upon review at any point of time.
Being a responsible business owner, you have to review the business structure you originally settled on periodically to ensure it continues to best meet the business’ needs. You might feel the need to change the shareholder structure of your company. There are particular scenarios when a change of shareholders in a Dubai or other UAE company becomes necessary. There are specific particulars in the procedure and documents for such alteration which rely on the company type and place of its registration – mainland or free zone. Further if it’s a free zone company which free zone exactly it is registered under and other factors. Let’s not get into particulars of specific free zones at the moment and focus on the basic documents, steps and procedures required to change the shareholders structure of UAE companies.
Transfer of Existing Shares to the New Corporate Shareholder(s)
Ahead you will find the main elements that has to be in place to alter the shareholding structure of your company in Dubai or any other emirate of the UAE:
- Gather all the relevant documents of new shareholder/s
- Make the share transfer forms and resolutions ready
- Duly sign the transfer forms and resolutions registering the new shareholder/s
- Obtain the new set of the documents from the registry
- On the documents required from the new shareholder – if this is a physical person – these documents would include passport copy and other personal identification elements. If the shareholder is another company – corporate documents on such a company will be needed along with the documents of such company’s directors and shareholders
Share Transfer Documentation
The process of share transfer finishes in two stages. Let’s make a note of the documents that are required at each stage.
Initial Approval
- At this stage the business person has to furnish a request letter stating the desired type of transaction and its details signed by the Manager-In-Charge
- Certificate of Incorporation (Notarized) or Copy of Commercial Licence
Transfer of Shares
- A Shareholders Resolution from the existing FZ-LLC shareholders (Notarized & Attested at the level of UAE embassy)
- A Board Resolution from the new corporate shareholder (Notarized & Attested at the level of UAE embassy)
- Share Transfer form duly signed by the seller and purchaser (Notarized & Attested at the level of UAE embassy)
- RIC Form for Corporate Person – of each new shareholder(s)
- Undertaking letter for activity
Shareholders’ Particulars
Scenario 1: The New shareholder is a Foreign (non-UAE) Company
- Certificate of Incorporation (Original or Notarized)
- Certificate of Good Standing (Original or Notarized)
- Memorandum of Association (MoA) and Articles of Association (Notarized)
Scenario 2: The New shareholder is a UAE Company
- Copy of Commercial Licence
- Memorandum of Association and Articles of Association (AoA)
Submit the bunch of all the duly signed documents along with the forms to the respective registry as well as the applicable payment to apply for changes in shareholder structure. Within a week or so you will receive revised corporate documents substantiating the new shareholder (s) from the registry.
Share Transfer Fees
Process Fee: AED 3,000 per transaction
Fee for Amendment of Articles of Association: AED 500
Additional Fee: AED 10 as “Knowledge Dirham” and AED 10 as “Innovation Dirham” per transaction
Timeframe
Stage 1: 10 working days
Stage 2: 3 working days
Other Prerequisites for Shareholding Structure Change
Depending on the requirements of each specific authority under which the company is registered, the share transfer form essentially includes the data of the company, the percentage of shares which are to be transferred to the new shareholders, details of existing and new shareholder/s and signatures. The mandatory prerequisite for the shareholder change is the absence of any payments due for the UAE company license and other government fees as well as validity of its licence and other corporate documents. Another necessary prerequisite is the successful check by the authority of the new shareholders under the KYC procedure.
Impact on Corporate Banking
Intimating your bank about the change in your UAE-based company’s shareholder structure is imperative. In case the change refers to less than 50% of company shares, the bank may simply accept the documents of the new shareholders and the company can continue its banking operation. On the other hand, if the percentage of shareholding transfer is 50% and more, usually banks request to close the account during the shareholders change process itself and reopen a new account once the change is done because the company with more than 50% new shareholders has to undergo due-diligence again.
How can Adam Global help you?
Business is no less than a labyrinth of ever-changing situations. You have to find your way to success. If at any point of time while locating the right path you feel yourself lost in the maze, just engage one of the best business consultants in Dubai such asAdam Global Dubai. We are delighted to invite you to consult your business issue with us for free. So you can better understand how you can benefit from our expertise in every aspect of business in Dubai, UAE.
