While Dubai may be rightly famed for its lack of red tape, there are a few pieces of documentation that you will need to familiarise yourself with when starting a business out here. Not least, the Shareholder Agreement.
While traditionally put in place to protect overseas investors when going into business with local sponsors, shareholder agreements are now increasingly commonplace even where companies are wholly owned by non-GCC nationals.
These agreements are designed to make clear the terms of any engagement between different shareholders of a UAE business. While complex at first glance, with the help of a local expert, drafting and ratifying shareholder agreements can be straightforward.
If you’re considering starting a business in the UAE, you should seek the services of such an expert who can advise on the need for and contents of any official agreements. Here are some key points for your consideration.
What is a shareholder agreement?
In simple terms, a shareholder agreement is a formal legal document which details the terms of the relationship between UAE company stakeholders.
It outlines the ownership stake of each shareholder, along with other factors such as obligations, management rights, licensing details and more.
A shareholder agreement is put in place to protect all parties and offer clarity during events such as business sale, shareholder death, further investment, and the like.
Information within a shareholder agreement can include:
- Shareholder details
- Director and management details
- Company objectives
- Mandatory and optional share prices for buybacks
- Right of refusal information
- Profit share
- Shareholder remuneration
Who requires a shareholder agreement?
There is no formal requirement for UAE businesses to have a shareholder agreement in place. It is, however, common commercial practice.
As well as the optional but advisable shareholder agreement, there is the formal requirement to produce Memorandum and Articles of Association (MOA) for LLC companies in the UAE.
Under UAE law, all MOAs must be registered and notarised. While there is no requirement to do this for shareholder agreements, once again, it is increasingly common and certainly advised.
Notarisation can help to avoid and settle disputes between shareholders, which, while not common, have been known to arise.
Before starting your business, discuss your requirement with a respected company setup agent such as Business Incorporation Zone (BIZ). We can advise which documents are required and create them for you, as well as attest other formal documentation.
All we require from you is a colour copy of your passport and your trade license as well as your MOA and your Local Service Agent agreement (LSA) if applicable.
What are the benefits of a shareholder agreement?
There are many benefits to having a shareholder agreement in place. The main ones are flexibility and intricacy.
While an MOA must detail each shareholder’s holding, agreements can go further, detailing remuneration, profit share, and obligation both to and from the company. Also, unlike MOAs, details of the shareholder agreement can remain private.
Shareholder’s agreements are also easier to amend. Shareholders can alter and add to agreements over time without having to follow the much more involved process of redrafting MOAs.
What is the cost of drafting a shareholder agreement in Dubai, UAE?
The cost of drafting a shareholder agreement will depend on your company jurisdiction, the number of shareholders, level of detail and much more.
A basic document would usually cost in the region of AED 500 to AED 1,000, though this can run well into the thousands depending on the complexity of your situation.
Get in touch with BIZ with your requirements, and we’ll quickly provide you with a detailed quote.
We can also assist with your trade licence and visa applications. Again, the total costs involved will depend on many factors, including company size, premises, setup type and more. To give an idea, BIZ offers trade license packages with one visa for around AED 22,000.
Benefits of working with BIZ shareholder agreement services in Dubai, UAE
When you work with BIZ, not only do you save time, you also gain expertise. You can relax, safe in the knowledge that any shareholder agreement is accurate, compliant and will stand the test of time.
As well as drafting shareholder agreements, we can also assist with the notarisation and attestation of a range of official documents that may be required when doing business in the UAE.
And that’s not all. BIZ is also a one-stop-shop for all things relating to company setup.
We are a team of company registration professionals who are passionate about bringing the dreams of aspiring entrepreneurs and SMEs to life.
As well as handling your license application, BIZ can assist with the opening of corporate bank accounts and advise on the most appropriate financial institution to suit your specific needs.
We also offer visa and immigration services and can handle all government formalities, permissions, work permits and visa applications that are required to trade in the UAE.
In short, our experts can establish your company on your behalf, make your license and visa applications, and take care of your accounts and document services – leaving you free to get on with running your business.
When you start your business with BIZ at Fujairah Creative City, you’ll benefit from:
- 100% business ownership
- 0% personal & corporate income tax
- 100% repatriation of capital and profits
- No need for a No Objection Certificate from your sponsor
- Multiple business activities under one name
- The ability to start your business while outside of the UAE
- No requirement for paid up share capital
Visit our website to find out more about BIZ — businessincorporationzone.ae.
Or to find out how we can support your business with our expert shareholder agreement services, fill out this simple contact form to request a quote: https://www.businessincorporationzone.ae/value-added-services/