Transfer of Shares in a Limited Liability Company (LLC) in Dubai (Mainland)

Introduction

Under the UAE Companies Law, shares of a company, while belonging to the company’s shareholder(s), can be sold or transferred to other individuals or corporate entities. Such transfers occur for various reasons.

Some shareholders transfer shares to capitalize on a profitable investment, to liquidate one’s holdings, or to exit a company. Additionally, shares may be gifted or inherited within families as a means of transferring ownership. Individuals or entities may also purchase shares with the intention of acquiring ownership in a company.

What is a Limited Liability Company?

The Limited Liability Company (LLC) is the most popular type of company in the U.A.E, for it combines legal protection of the shareholders with allowing operational flexibility. Limited Liability Companies consist of a number of partners starting from one (1) but not more than (50) fifty, and each of them shall only be liable only to the extent of his share in the capital. This feature not only protects investors’ personal assets but also fosters a conducive environment for expanding investment horizons.

What is Share Transfer?

Share transfer is when ownership of shares in a company moves from one person or entity to another. It could be between an existing shareholder (individual or corporate) or a new party (individual or corporate). To be valid, the Share Transfer Agreement and Amendment to the Company’s Memorandum of Association have to be notarized and registered with the Dubai Department of Economy and Tourism in Dubai (also known as Dubai Economic Department), which acts as a registrar of companies on the mainland.

Necessary Documents for transferring shares in Dubai Mainland company:

In the case of an individual shareholder:

• Passport copy
• Address and contact details
• Emirates ID and UAE visa copies (if a UAE resident)

In the case of a corporate shareholder:

• Trade License
• Certificate of Registration
• Shareholder Resolution
• Memorandum of Association (MOA)
• Articles of Association (AOA)
• Power of Attorney to a company’s representative
• Company’s representative Passport copy and Emirates ID and UAE visa copies (if a UAE resident)

(in the case of a foreign company, the documents must be attested with the UAE Embassy and Ministry of Foreign Affairs (MOFA) in UAE and translated into Arabic).

Procedures for Transferring Shares of LLC through the Dubai Department of Economy and Tourism in Dubai (DED):

To transfer shares in a limited liability company (LLC) registered on the mainland, you’ll need to take the below steps:

1. Submitting the Application and Initial Approval from DED

The process begins with the physical submission of a share transfer application through service centers of DED located in the Emirate of Dubai. The company’s official representative/PRO, a manager, or one of the shareholders must attend. A person who holds a POA from the company with the necessary powers can also submit such an application. The application contains the information about the shares being transferred the party who is transferring and the party who is receiving the shares. Upon receiving the application and verifying the details, the DED will issue an initial approval.

2. Drafting Share Transfer Agreement and Amendment to MOA

Following the initial approval from DED, the Share Transfer Agreement (or Share Sale and Purchase Agreement) and Amendment to the MOA has to be drafted. Usually, both are combined in the same document. Such a document outlines details such as the new shareholder’s identity, the number of shares being transferred, the sale price, and any pertinent adjustments to the company’s status post-transfer. The Share Sale and Purchase Agreement and Amendment to the MOA is usually a standard document that contains essential conditions of the share transfer, and it will be notarized. If the shareholders would like to enter into a more detailed share sale and purchase agreement outlining details that can not be added in the MOA Amendment, it is advisable to enter into a separate and more detailed Share Sale and Purchase Agreement, keeping in mind that, such document is to regulate internal relations and shall not be notarized.

3. Executing the Share Transfer Agreement and Amendment to the MOA

At this step, the Share Sale and Purchase Agreement and Amendment to MOA of the company must be formally executed before a local notary public. In some instances, if the share transfer is between individuals, the DED can also execute the Share Transfer Agreement and Amendment to MOA directly at the DED office without the need to go to the notary offices. Alternatively, UAE residents can opt for online notarization through the Dubai Courts online portal. It is important to note that all existing and new shareholders or their representatives with a Power of Attorney must attend the signing at the notary. Once the Share Sale and Purchase Agreement and the MOA Amendment are notarized, the company officially has adopted the new shareholder structure and distribution of shares.

4. Registering the Share Transfer with DED

The final step is to submit the notarized Share Transfer Agreement and Amendment to MOA along with all other required documents as listed above to DED for registration. After receiving the documents, the DED will issue a payment voucher outlining the government fees for formally registering the share transfer in official records and amending the company’s registration documents and license.

5. Payment of Fees

Upon payment of fees based on the payment voucher issued by DED, the amended incorporation documents of the company shall be generated and shared electronically. The total fees vary based on a number of factors such as share capital, number and value of shares, number of partners being removed or added, etc.  

How can CorpLex help?

At CorpLex, we’re committed to simplifying share transfers for you. Whether you’re transferring shares within your company or to others, we’re here to guide you every step of the way.

Our experienced team ensures a hassle-free process by handling all the technicalities and legal requirements on your behalf. You can rely on us as your dependable partner, ensuring a smooth and successful share transfer experience.