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At the moment of company establishment, every firm should conform to a specific legal framework. If you run a firm, you must assess its structure on a regular basis. At times, it may be necessary to alter the company's ownership structure.
A transfer of owners in a Dubai or even other UAE corporation could be necessary under certain circumstances.
There really are specifics in the method and documentation for these kinds of changes, that depend on the type of company and its location of registration, whether it is in the main UAE territory or a free zone.
Essentials for a shareholders change in Dubai or other UAE company:
- Getting the necessary documents on the new shareholders
- Preparing share transfer forms and resolutions.
- Signing the transfer forms and resolutions registering the new shareholders.
- Receiving the new set of documents from the registry
The documents required from new shareholders include a Passport copy, Other personal identification elements & If the shareholder is from another company, its corporate documents are required.
The share transfer form is determined by the authorities where the firm is registered.
It contains the following information:
- The company's information
- The percentage of shares that will be transferred to new shareholders
- Details about current and new shareholders, as well as signatures
The shareholder change documentation, along with the required payment, must be filed with the appropriate registrar. The register update takes around one week to complete. When the transfer is finished, the registration releases new company documents with the new shareholder information.
Documentation for Share Transfer
The share transfer procedure is divided into two steps. Let's go over the documents that are necessary at each level.
1. Initial Approval:
- The businessperson must submit a letter of request outlining the intended type of transaction and its specifics. The Manager-In-Charge must sign this.
- Certificate of Incorporation Notarized/Copy of Commercial License
2. Transfer of Shares
- A Shareholders Resolution passed by the current FZ-LLC shareholders (Notarized & Attested by the UAE embassy)
- A new corporate shareholder's Board Resolution (Notarized & Attested by the UAE embassy)
- Share Transfer Form signed by both the seller and the buyer (Notarized & Attested by the UAE embassy)
- Each new shareholder must complete the RIC Form for Corporate Person.
- Letter of commitment for an activity
Particulars of Shareholders
The firm might be headquartered in the UAE or elsewhere. The following documents must be submitted:-
If the new shareholder is a non-UAE company:
- Incorporation Certificate
- Good Standing Certificate
- Articles of Association and Memorandum of Association
- If a UAE-based corporation is a new shareholder
- Copy of the Commercial Licence Memorandum and Articles of Association
To apply for changes in shareholder structure, submit all legally signed papers, forms, and the relevant payment to the respective registration. Within a week, you will get the corrected company paperwork from the registration confirming the new shareholder.
The following are indeed the share transfer fees:
- AED 3,000 per payment as a processing cost
- AED 500 for amending the articles of association.
- AED 10 for "Knowledge dirham" and AED 10 for "Innovation dirham" each transaction.
Additional requirements
There must be no outstanding payments for the UAE business license, other government fees, the validity of its license, or other corporate documentation. A thorough check by the new shareholders' authorities under the KYC procedure.
What should I do with my bank account?
The bank must be notified of any shareholding changes.
If the modification affects less than 50% of the company's shares, the bank may simply accept it. The business can continue to operate.
If the proportion of shareholding transfer is 50% or above, banks will require that the previous account be closed and a new one be opened.
FAQs
Here are ten frequently asked questions (FAQs) about shareholder changes and the share transfer process in Dubai and the UAE:
- What is required to transfer shares in a UAE company?
To transfer shares, the process includes obtaining documents from new shareholders, preparing and signing share transfer forms, submitting resolutions, and filing these with the relevant registrar. The company must also ensure all licenses and government fees are up to date. - What documents are needed from new shareholders for a share transfer?
New shareholders must provide a passport copy and personal identification. If the shareholder is a corporation, additional documents like the Certificate of Incorporation, Articles of Association, and Memorandum of Association are needed. - How long does the share transfer process take in Dubai or the UAE?
Once all documents are submitted to the relevant registrar, the register update generally takes around one week to complete. - Are there any fees associated with a share transfer in the UAE?
Yes, fees include a processing cost of AED 3,000, AED 500 for amending the Articles of Association, and an additional AED 10 each for "Knowledge dirham" and "Innovation dirham." - What is the difference in share transfer requirements for mainland vs. free zone companies?
Requirements may differ based on the location. For instance, free zone companies typically need notarized and attested resolutions from existing shareholders, whereas mainland companies may have specific document requirements set by the Department of Economic Development. - Do banks need to be notified of a shareholder change?
Yes, banks must be informed of any changes in shareholding. If less than 50% of shares are transferred, the existing account remains active. If 50% or more shares are transferred, the bank may require the current account to be closed and a new one opened. - What additional steps are required if a foreign company is becoming a shareholder in a UAE business?
If a foreign company is the new shareholder, documents like a Good Standing Certificate, Articles of Association, and Memorandum of Association must be provided, all attested by the UAE embassy. - What is the RIC Form, and when is it required?
The RIC Form (for Corporate Person) must be completed by each new shareholder who is a corporate entity. This form is typically required in free zone transfers. - Are there any additional requirements or checks for new shareholders?
New shareholders must undergo a KYC (Know Your Customer) check, and the company must ensure there are no outstanding government fees or expired business licenses. - What are the consequences of not updating the registrar about a shareholder change?
Failure to update the registrar may lead to legal and financial complications, including penalties and invalidation of the transfer. It’s essential to submit all necessary documents and payments to ensure a compliant shareholder update.
If you’re managing a shareholder change and need support, Finanshels offers expert guidance to simplify the process and ensure compliance.
Conclusion
Navigating shareholder changes in the UAE requires a clear understanding of regulatory steps, legal documentation, and banking requirements. Accurate completion and submission of these documents ensure a smooth transition and compliance with UAE corporate law. If you need support managing such transitions, Finanshels can help streamline the process, ensuring every requirement is met efficiently.
