How to buy a business in Dubai and the wider UAE

A new legal person carries none of that. Buying into an existing one calls for review of the whole company: corporate, then financial, then tax. Later sections set out the mechanics: the paperwork a business for sale in Dubai requires, the approvals, the time the transfer takes, the costs the acquirer meets. They set the standard free zones against the mainland. Both are then set alongside DIFC, and against ADGM, before the new holder's tax and post-registration obligations conclude the procedure.

When an existing company beats a new one

The phrase “ready-made company” covers two distinct cases. One is a registered entity with no trading behind it. The other is a working firm: staff, property, contracts, a tax history. An investor who sets out to buy a shelf company in the UAE may end up with a live licence, working banking and leased premises but no trading at all. Before terms are agreed, the two parties must settle what changes hands. A vendor may be offering all the membership interests, or corporate control, or a minority holding, or a schedule of assets that leaves the legal person behind.

An acquisition earns its place where the acquirer wants the operating structure kept intact. Long-term contracts and a proven record on delivered projects argue for it. So do a trained workforce, the client base, the equipment and the intellectual property. Where a sector approval permits a switch of controlling person, the business trades on once the regulator clears the deal. An acquisition preserves what a fresh incorporation would have to put in place from nothing.

• The employment relationships, the work permits and the operating routines
• The contracts with customers, with suppliers and with the landlord
• The sector approvals, wherever their terms let control pass
• The property, the software, the domain names and the trade marks
• The registration number, the corporate past and evidenced revenue

A sale of membership interests is one transaction and an asset deal quite another, and the difference decides what the acquirer inherits. Once the interests pass, the legal person survives, still bound by what it owed before, whether to government bodies, banks, personnel or counterparties. That spares the parties one job. Re-papering each item under its own contract falls away, though the review of past operations must then cover more. An asset transaction dictates the transfer of only the agreed schedule of property and rights, while the contracts, the licences and the staff move across under separate procedures.

No assurance attaches to the banking arrangements, the visa quota or the tax position where control changes hands. The bank re-identifies the incoming beneficial owner. Whether the licence conditions are still met is for the regulator to judge, and it takes its own view, while free zone administrations examine the purchaser's papers before recording anything. An existing lease survives only where nothing in its terms bars a switch of control, and where the landlord has given whatever consent is owed.

Incorporating afresh often represents the safer route, particularly where the seller withholds financial accounts, blocks access to the tax portal, or refuses to produce bank statements. Large debts, live litigation and a blocked account are each reason enough to walk away, as is a licence out of step with the intended activity and a heavy bill for curing past breaches. A purchaser who wants neither the assets nor the staff, and has no use for the contracts or the trading history, gains nothing in economic terms from an off-the-shelf business.

What governs a share transfer in Dubai and in the free zones

UAE law recognises no separate company type for ready-made businesses, so the parties effect the acquisition by transferring corporate rights in an entity that already exists, then updating the record of who owns it. Three distinct criteria dictate which rules apply: where incorporation happened, how the ownership is shaped, how far the licence reaches.

Mainland companies answer to Federal Decree-Law No. 32 of 2021 on Commercial Companies, known for short as the CCL. Falling under it: partners' rights, the keeping of corporate registers, the movement of membership interests, the running of the firm, its constitutional documents. Next to it stand commercial registry legislation and the AML Law. In full, the latter is Federal Decree-Law No. 20 of 2018 on Anti-Money Laundering and Combating the Financing of Terrorism and Financing of Illegal Organisations. Reaching it as well are tax procedures and corporation tax, with value added tax (VAT) separately, and insolvency and bankruptcy behind them. Mergers and acquisitions in the UAE rarely turn on the corporate statute alone.

Where registration took place decides who records the change, and on what terms.

In a mainland limited liability firm, membership interests cannot go to an outsider without engaging the remaining partners' pre-emption right. The seller gives them notice through the manager, naming who the assignee is and what terms are on offer. The remaining partners may then require the interests to be redeemed, and the statute gives them 30 days, counted from the day the manager tells them the agreed price. Bypassing this statutory procedure provides the non-selling partners with clear grounds for a corporate dispute.

In many sectors an overseas investor may hold the whole of the interests in a UAE entity, though the right does not stretch automatically to every activity. Whether the target operates within a strategic sector is established first, and settled next are the industry clearance, the qualification demanded of the director and the scope for changing the controlling person. Some sectors need clearing first, and for projects in finance, insurance, medicine, education, transport or other regulated fields that clearance may have to precede registration. Standard free zones run the purchase by the rulebook of the particular administration, with DMCC and JAFZA each operating their own applications, partner resolutions and transfer forms. Re-registration inside DIFC or ADGM runs under separate rules again, and the financial regulators step in only where the services provided are licensed.

Due diligence in the UAE before the acquirer signs

Where the interests change hands, the legal person remains bound by everything it has already incurred, so the review has to go further. It covers the entity itself and its operations, its property, and the record of how the firm has met its duties. A check of the vendor's passport proves little, and it tells the buyer nothing about arrears, security over the interests, tax breaches or licence restrictions.

Corporate review originates at the entity's place of formation, and there the active licence, the registration certificate and the Memorandum of Association (MoA) are examined alongside the articles and every subsequent amendment. From there the buyer works through the registers of partners and directors, of managers and of ultimate beneficial owners. Wider still runs the paper trail. Share certificates, resolutions of the governing bodies, powers of attorney, any agreement the owners struck: all come into view. The buyer examines the options and the pledges in turn, then the branches and the subsidiaries, then any pre-emption that exists. Documents that establish the vendor's power to dispose of the corporate rights come before any signature.

• Active powers of attorney, alongside required nominee disclosures
• Confirmation that the interests carry no pledge or attachment
• A current extract from the commercial registry, with the constitutional instruments
• The details of direct and of indirect ownership
• The resolutions granting options and convertible instruments
• Pre-emption waivers signed off by the remaining partners

The trade or economic licence deserves scrutiny of its own. Due diligence in the UAE reaches how long it has to run and what activities it permits, together with any additional regulatory approvals attaching to it. Renewal conditions belong there as well, and arrears owed to the registrar come next, followed by administrative sanctions. Requirements on premises, on personnel and on minimum share capital complete the analysis, while the scrutiny of the licence settles a further question: does a switch of control require prior approval?

Tax work starts with the registrations. Corporate tax and VAT both come into it, and returns and computations follow, then settlement of liabilities, then the fines. Audits and voluntary disclosures round off the fiscal review, which then settles two questions: does the target sit inside a tax grouping, and how has it dealt with related parties. That same scrutiny tests compliance with transfer pricing requirements, and any claim to qualifying status with it. Recourse to small business relief comes under the same head, as does the treatment of tax losses, while economic substance reporting for 2019 to 2022 sits apart. The regime has stopped applying to financial years that end after 31 December 2022, but that change annulled neither the earlier breaches nor the sanctions imposed for them.

On the financial side the buyer sets the accounts and the audit reports against the bank statements. Credit facilities and loans follow, together with the guarantees, the receivables and the payables. Debt exposure runs further than that, taking in off-balance-sheet obligations and settlements with connected persons. Leases and any indicator of insolvency form part of it, while the banking side merits separate attention, since any bank will run its own identification of the incoming partner. It may restrict operations or end the relationship outright.

Employment exposure comes next: the agreements themselves, arrears of wages, and the WPS. Termination benefits, the leave entitlements and labour disputes belong to the same scrutiny. Emiratisation compliance standards are similarly evaluated. Neither work permit nor residence visa can be out of date, and the official labour file maintained by MOHRE must equally withstand scrutiny. The establishment card needs verifying too, and that one comes from the ICP. Court cases, enforcement proceedings and arbitrations complete the picture, and so does exposure to sanctions. Title to assets belongs there, intellectual property with it, and such change-of-control provisions as commercial agreements embed.

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From first contact to registration

Acquisitions begin by defining the subject matter of the sale, how many interests are to move, what consideration is payable and on what review conditions. The parties sign a non-disclosure agreement and often record the commercial terms in a preliminary document, and an exclusivity period is usual, keeping the seller from other buyers while the review runs.

Identification of both parties comes next, and examination of the target. Disclosed are the partners, the directors, the beneficial owners standing behind them, together with the origin of the funds. An overseas legal person on the buying side draws further demands from the registrar: constitutional documents, resolutions of the governing bodies, proof that whoever signs can bind it.

Commercially, everything hangs on the sale and purchase agreement. Under that agreement are fixed the number and class of interests, the consideration, the payment mechanism and the basis for any subsequent adjustment. Into it go the vendor's warranties and the tax covenants, plus the indemnities for pre-completion liabilities, and alongside sit the liability for incomplete disclosure and the terms on which management is handed over. Anyone setting out to buy an existing business in Dubai must draw a strict distinction between the commercial agreement executed by the parties and the formal instruments submitted for regulatory registration. Signing the first completes nothing where the registrar wants a separate transfer instrument, and the administration may call for its own application, a transfer deed, an electronic form or a revised MoA. The corporate pack expected by the registrar is a standard one.

• Termination of the outgoing management's authority
• The resolutions of the vendor and of the corporate buyer
• Appointing the incoming manager or directors
• Constitutional documents in a fresh version
• Partner approval at the target
• Waiver of pre-emption

Consents come next in the sequence, with the registry and the industry regulator giving theirs. The zone administration, the lessor, the bank or a principal counterparty may each have to sign off besides. Mainland applications go to whichever economic department covers the emirate. Each zone keeps its own gateway, paperwork and regime. Signing may run through electronic identification or UAE PASS, through remote notarisation, in person, or by power of attorney.

What the purchase costs and how long it takes

Federal law fixes no single price and no common timescale across the jurisdictions. What buying a business in Dubai costs is dictated primarily by three variables: the emirate, the chosen jurisdiction and the corporate structure, with partner count further affecting the total outlay. The licence moves the figure again, as does any regulated status. Pledges and debts push it up, and so do a long ownership chain, overseas papers and the need for prior clearances.

Price and share capital are separate measures. What the interests fetch reflects net assets and revenue as much as profit and liabilities. The commercial agreements and the active licence factor heavily into this valuation, as do the client base, the property and the tax risk. Nominal value is a different measure, fixing how large the corporate rights are and telling the acquirer nothing about what the interests would fetch.

Across a typical transaction the outlay falls into several distinct groups.

• The price of the interests or shares
• Legal, tax and financial review
• The charge for amending both licence and constitutional documents
• Licence renewal, rent and sector clearances
• The registrar's fee for changing the owners
• Business valuation, and settlement of debts and administrative sanctions
• Zone charges, plus renewing the card
• Notarial, translation and legalisation costs

Four stages take the time up front. Preliminary identification, the full review, agreement of the contract and collection of the pre-emption waivers all precede everything else. Sector approvals come after that, then signature, then the registry entry. Updating what the bank holds comes last, together with the tax and immigration systems.

Registry work is charged by tariff. What it costs is set by whichever economic department is competent, or by whatever free zone the parties ultimately selected. The price differs on the mainland, in DMCC and JAFZA, in DIFC and in ADGM. An overseas corporate participant pays in addition for translation, for certification and for legalisation of its documentation, and how the tax and accounting records have been kept affects the figure too. Fines that surface during the examination, a lapsed licence, rent arrears and unpaid wages either reduce what the operation is economically worth or force part of the payment to be withheld. Ownership can run through several holding layers. The parties then pay for a review of each intermediate holder.

Tax after the acquisition

Whoever buys into a UAE firm inherits its tax past. Everything currently owed comes with it. The legal person keeps its registration number. Earlier returns remain attached to it, as do the arrears and the fines, the losses and the outcome of any audit. Control passes to the incoming partner; the tax record does not start again.

The corporate tax charge comes first. The opening AED 375,000 of taxable profit carries none of it. Beyond that point the rate becomes 9%. Filing and payment share a singular deadline: nine months following the tax year's close. A shift of ownership puts accumulated losses back under statutory test before they can be used. Related-party dealings must conform to the arm's length principle and to transfer pricing rules. Two further items need checking after the purchase. One is membership of a tax grouping, the other concerns dealings with related parties.

A free zone address is no automatic exemption from corporate tax. The Qualifying Free Zone Person regime carries conditions, and only a company meeting every one of them gets the 0% charge on qualifying profit. Those conditions cover the actual presence, the personnel and the assets. Operating expenditure and audited accounts come next, then dealings with the mainland. Excluded activities and the permitted share of non-qualifying revenue complete the test.

VAT arises once turnover reaches the prescribed level. Compulsory registration follows once taxable supplies pass AED 375,000 across a rolling year, and equally where a firm expects that threshold to fall inside thirty days. Once AED 187,500 is exceeded, voluntary registration becomes possible. A file holding no registration certificate is still no proof that the duty never arose. Nothing is cancelled by a change of partner, so the returns and the tax invoices remain in scope, then imports and reverse charge. Then come the refunds, the penalties and any group membership. Where individual assets are acquired instead of corporate interests, transfer-of-a-going-concern (TOGC) provisions call for evaluation as well, though an ordinary sale of interests shifts no company property at all.