The Mainland business environment in Dubai, on its mainland, is progressing rapidly due to investor-friendly reforms, transforming how companies conduct business and change ownership. With the UAE having dropped the 51% local ownership promotion, a foreign investor is currently freer, but selling an already existing mainland company remains a straightforward legal procedure overseen by the Dubai Department of Economy and Tourism (DET). Any oversight in this process may result in licence complications, visa problems, or even the rejection of the application, so buyers and sellers must be aware of the rules and procedures to be followed.
The importance of Ownership transfer.
In a case where an existing business is sold, it is not limited to the buyer and seller signing an agreement. It also involves legal approvals and adherence to DET protocols. To investors, this guarantees that the transaction does not go to waste, secures existing contracts, and maintains labour and immigration files when the time is right
DET may transfer ownership under most legal systems throughout the mainland, such as:
Limited Liability Companies (LLCs).
Sole establishments
Civil companies
One-person LLCs
The transferability is based on the legal form:
- Shares can be distributed or sold through an amendment to the Memorandum of Association (MoA) in LLCs.
- In single establishments, a change of ownership normally involves the cancellation and reissue of the licence in the name of the new owner.
- Civil companies follow a similar process, including amended partnership agreements.
Effects of Full Foreign Ownership Proformas.
Impact of 100% Foreign Ownership Reforms
Since the enactment of federal Decree-Law No. 26 of 2020, the majority of mainland companies have become open to 100 percent foreign ownership, without the prior requirement that a UAE national hold a majority stake. Nevertheless, there are areas of the strategy (such as defence, telecommunication, and banking) where UAE involvement or regulation is still necessary.
This reform has expedited the transfer of shares and enabled easier succession planning, particularly among start-ups and SMEs that wish to formalise ownership arrangements previously achieved through nominee arrangements.
DET Approval Workflow
The sale of ownership includes several steps:
- Application Submission : Both the buyer and the seller submit a change of ownership application to DET via the online portal or at a DET service centre.
- Initial Review : DET verifies the application and may seek additional approvals if the company operates in a regulated sector (e.g., healthcare, finance).
- Document Preparation:To transfer shares in an LLC, the following is usually required:
Share purchase agreement
- New ownership addendum at MoA.
- Partner/seller NOCs
- If applicable, shareholder resolution
- Legitimate passports and identities of all the parties.
The licence is transferred to the new owner after the necessary legal formalities are completed in sole establishments and civil companies.
d. Last Approval and licensing update : Upon satisfying DET, the new ownership is registered on the trade licence and corporate books.
Costs and Timeframes
When the ownership of an item is transferred, there are several fees associated with it, and they include:
DET licence amendment fee: As a rule, it is 1500-5,000 AED.
Notary charges: Approximately 0.25% of the value of transferring the shares.
Legal drafting, translation, and attestation services are subject to additional fees.
Timeframe:The basic share transfers for an LLC can be completed in 1-2 weeks.
A complex case involving external regulatory approvals, foreign corporate shareholders, or other complications can take 3-6 weeks.
Corporate updates and Post-Transfer Compliance
Transfer of ownership will also affect the trade licence. Both the sellers and buyers should make sure that:
- Banking requirements are revised.
- The VAT and UBO (Ultimate Beneficial Owner) registries have been updated.
- New ownership is manifested in contracts and company documents.
- Employee visas and labour files remain valid (or are reissued upon a change of legal form).
Any liabilities, such as financial obligations or regulatory fines, are transferred to the buyers; hence, due diligence before sealing the deal is crucial.
Free Zone Transfers is a comparison
Although the transfer of ownership can also be carried out in free zones, the procedure is different:
- Notarisation of the MoA through the Dubai Courts is required in the mainland transfers.
- The free zone authorities are the registrars and normally handle the entire process in-house, without notarisation, so transfers are normally quicker and simpler.
General Objections and Jurisprudential Clarifications
Regarding transfers of ownership, it can face challenges like:
- Valuation or pre-emptive rights disputes.
- Terminating sponsors who require compensation.
- Uncertainty about the process of the transfer of the sole establishment.
Because the official guidance from DET is still evolving, many companies turn to experienced legal consultants or corporate service providers to become more comfortable with compliance
Guidelines for a Seamless Transfer of Ownership
Due Diligence Essentials:
- Test financial statements and contracts.
- Determine regulatory problems and liabilities.
- Make sure that all corporate approvals are taken.
Contractual Protections:
- Make use of unequivocal share purchase agreements.
- Think about escrow plans based on milestones of completion.
- Add protection in the form of warranties and indemnities.
CONTACT MY TAXMAN TODAY !
The sale of a corporate company located on the mainland of Dubai is a systematic yet straightforward process. With proper documentation, adherence to DET procedures, and proper handling of transactions, buyers and sellers can complete their transactions effectively without disrupting regulation or business operations.
Contact My Taxman today at +971-543223140 to book a free consultant.
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