Add a Shareholder to a UAE Company: 7 Easy Steps

Table of Contents

Introduction

An additional shareholder to your UAE company may allow you to acquire investors, grow your business, or share ownership with a strategic partner. Nevertheless, the procedure is not just about settling the percentage of ownership. There may be some documents that will require amendments, as well as some approval from the regulatory body in question along with some fees for the transfers and amendments.

If you plan to Add a Shareholder to a UAE Company, being aware of the regulations before beginning the procedure may allow you to save time and money.

In this guide, you will find information about the procedure of adding a shareholder, necessary documents, the cost of the service, the requirements of mainland and free zones, and the common mistakes to avoid.

Can You Add a New Shareholder to a UAE Company?

Indeed, there are many UAE companies that may add additional shareholders, depending on their legal structure, licensing jurisdiction, constitution, and laws. The new shareholders can either be individuals or companies, depending on the structure of the company and the requirements of the particular jurisdiction.

There are various reasons why companies add new shareholders, including:

Business expansion: Find an associate who can invest funds, expertise, or connections into the business.
Financing: Raise funds to finance the operations of the business.
Redistribution of ownership: Transfer ownership amongst existing and new shareholders.
Strategic alliances: Provide formal ownership to an investor or a business partner.
Succession Planning: Transfer ownership in a broader strategy of business.

It is important to first find out if your company has been licensed from the mainland or from the free zone. There will be differences in the procedures involved in the UAE company share transfer/amendment.

Adding a Shareholder in a UAE Company – Step-by-Step Process

The whole process depends on the legality of the company and its licensing. This is an illustration of what the process looks like in real life.

Step 1: Assess the Present Ownership Structure

First of all, examine the current holding pattern of the shares in the company, the MOA of the company, as well as other constitutional documents of the company.

The following information should be checked:

Shareholder details and percentage of share ownership.
Total capital of shares and number/value of shares.
Any conditions attached to the transfer of shares.
Existing shareholder rights and required approvals.
Impact of the proposal on management or voting rights.

This review makes it clear that the prospective shareholder will buy shares from an existing shareholder or purchase new issues of shares.

Step 2: Decide Between a Share Transfer and New Share Issuance

There are two common ways to add a shareholder to a UAE company.

Option 1: Transfer existing shares

A share from an existing shareholder is sold partially or wholly to the incoming shareholder. The total share capital of the company normally remains the same; only the proportion of ownership changes.

For instance, an existing shareholder may sell 20% of his/her ownership to an incoming investor.

Option 2: Issue new shares

In situations where the issuance of shares is allowed, the company may issue more shares to the new investor. This will result in an increase in share capital of the company.

For instance, issuing of new shares by a company to an investor results in the original shareholders having smaller percentages of ownership of the company.

The process that should be followed is dictated by the company’s nature of business.

Step 3: Obtain the Necessary Approvals

Before finalizing the change, obtain the required approvals from the relevant parties and authority.

These may include:

Consent of existing shareholders as per the MOA or as stipulated by law.
Shareholders’ or partners’ resolution.
Consent of the relevant licensing authority on the mainland or the free zone.
Regulatory consent in case of companies operating in regulated industries.

Rights may be possessed by shareholders in a UAE LLC company that may impact the share transfer process when done to another party. This should be checked before concluding on the agreement.

Step 4: Prepare the Required Documents

Prepare the documents requested by the relevant licensing authority. Common requirements include:

Copies of passports of the incoming shareholder.
Emirates ID and residence visa of the UAE, if any.
License to conduct business/trade license and documents of incorporation of the company.
Existing MOA and any amendments that may be necessary.
Share transfer deed, in case the shares are being transferred from one person to another.
Resolution of shareholders approving the change.
Documents of incorporation, if the incoming shareholder is a company.
Information of UBO, if any.

Foreign business shareholders could need either a certification, notarization, or legalization of the documents, depending on their location.

Confirm your checklist before you provide your documents.

Step 5: Amend the MOA and Ownership Records

After getting the necessary clearance, the firm may have to alter its MOA to incorporate the new structure of ownership.

The amendment may include:

Information relating to the incoming shareholder.
New percentages of ownership.
New details of share capital, if any.
Any changes in management or voting rights, if agreed upon.

The documents could require to be notarized, signed digitally, or otherwise certified depending on the jurisdiction.

The final set of documents should capture the agreement made by the business partners.

Step 6: Submit the Application and Make Payment

The application form is to be submitted by the applicant with the other documents together with the necessary charges.

This application may then be scrutinized or corrected or more information may be asked by the authority before accepting it.

This process may entail:

Transfer or amendment of shares form.
Fees to the government or free zones.
Document notarization or attestation costs.
Updated corporate registration details.

Keep copies of the submitted documents and payment receipts for your records.

Step 7: Obtain the Updated Company Documents

After being approved, retrieve the new set of documents for your company and check to see that your shareholder has been officially registered.

It will depend on the jurisdiction where you reside if you get a new MOA, shareholders’ register, or ownership certificate among others.

You should also review whether the change requires updates to:

Account documentation and KYC of corporate entities.
Declarations of UBOs or other ownership documentation.
Shareholder register of the company.
Investor/Partner agreements.

Note: Adding a shareholder to the records of the business does not necessarily mean updating all banks or regulatory or third-party information. Review each requirement independently.

Documents Required to Add a Shareholder to a UAE Company

The documents required depend on whether the incoming shareholder is an individual or a corporate entity and whether the company is registered on the mainland or in a free zone.

Document	Purpose
Passport copy	Identifies the incoming shareholder
Emirates ID and visa copy, if applicable	Supports identity and residency verification
Existing trade license	Confirms the company’s registration
Current MOA	Establishes the existing ownership structure
Share transfer agreement	Records the terms of an existing share transfer
Shareholders’ resolution	Documents the required approval
Amended MOA	Reflects the revised ownership structure
Corporate documents	Establishes the identity and authority of a corporate shareholder

More documents could be needed, such as a board resolution, power of attorney, beneficial ownership, or legalization of corporate documents.

In order to avoid any delay, you should get the current list of documents from your licensing authority.

What is the Cost of Adding a Shareholder to an Emirate Firm?

The cost of amendment of an UAE shareholder depends on the licensing body, corporate structure, type of deal, and documentation involved.

There isn’t a universal fee that applies to all UAE companies.

Your total expenses may include the following:

Governance fees/Licensing fees: This fee applies to the processing of the shareholder amendment or share transfer.
Amendment fee on MOA: Fees associated with amending the constitution of the firm.
Notarization fees: Fees for notarizing documents when necessary.
Attestation fees for documents: These are the fees incurred for foreign corporate documents.
Fees for professional services: This is the cost of services provided during the documentation process.
Extra registration fees: These may apply in case the transaction affects the share capital of the firm.

What Affects UAE Share Transfer Fees?

The main factors affecting UAE share transfer fees include:

Jurisdiction: There are different fee structures for different jurisdictions and free zones in the mainland.
Transaction type: Transfer of shares might require more steps than issuing shares.
Capital change: Increase in the capital structure might involve more processes and fees.
Shareholder type: Introduction of foreign corporate as shareholder might be more complex.
Complexity: Processes that involve multiple parties including shareholders or regulation might need more effort.

For proper evaluation, ask for a detailed costing that covers all government fees, document certification, and professional help. Check the current cost from the concerned authority.

Mainland vs Free Zone: What Is the Difference?

The process to add a shareholder to a UAE company can vary depending on where the company is registered.

Requirement	Mainland Company	Free Zone Company
Approving authority	Relevant mainland licensing authority	Relevant free zone authority
Ownership documents	MOA and applicable company records	Free zone-specific ownership documents
Shareholder approval	As required by law and company documents	As required by free zone rules and company documents
Document signing	Authority-approved signing or notarization process	Free zone-approved process
Fees	Depend on the authority and transaction	Depend on the free zone and transaction

The mainland companies usually adhere to the guidelines set by the licensing authority as well as the UAE law. On the other hand, the free zone companies adhere to the procedures of the particular free zone.

It is not advisable to think that the procedures acceptable by one free zone will be acceptable by another free zone. You should ascertain the requirements of your company prior to any UAE company share transfer process.

Common Mistakes to Avoid When Adding a Shareholder

The simple issue of transferring ownership may get complicated by the inadequacy of documentation and approvals.

Avoid these common mistakes:

Neglecting the existing shareholders’ rights: Review the existing restrictions on transfer and pre-emptive rights before considering share transfer.
Having an incorrect ownership structure: Make sure that the share percentages agreed on coincide with the amended documentation.
Disregarding foreign document requirements: Foreign shareholders could need further certification of their documentation.
Not taking into account the cost of the process: You should consider all fees related to government services, notarization, attestation, as well as professional fees.
Neglecting UBO obligations: Think whether there is going to be any impact on the question of beneficial ownership and its reporting.
Ignoring recordkeeping requirements by the company: See whether there is any need for updates from the banks and other institutions regarding ownership.

Planning these steps in advance can help reduce administrative delays and make the ownership transition smoother.

Conclusion

Add a Shareholder to a UAE Company is a way in which an Emirati company could be helped to raise capital, grow, and establish strategic business relations. Nevertheless, it is important for you to consider several factors regarding the ownership of a company, share approval and registration, as well as payment of associated fees.

First of all, it should be determined whether the current case will include either the transfer of existing shares or issuance of new shares. Next, the requirements of your licensing authority should be established and all the required documents be prepared. Finally, the new ownership details have to be recorded after approval.

If you need additional help with this process, we recommend contacting E-Startup. It will be easier to make shareholder amendments and complete the required company documentation.

Frequently Asked Questions

1. Is it possible for a foreigner to own shares in a UAE company?

Foreign persons and organizations are allowed to be shareholders of companies in the UAE under various limitations and guidelines.

2. How much time is needed for including add a Shareholder to a UAE Company?

The timeline will vary based on the licensing body, the readiness of the documents, and the requirements for approval. A simple application may be done within a few working days, but complicated transactions may take some time.

3. Can I add a shareholder to a UAE LLC without changing the trade license?

A shareholder change may require an amendment to the company’s registration records and related documents. Whether a revised trade license is issued depends on the relevant authority’s procedures. Do not assume that the existing license and company records can remain unchanged.

4. Are UAE share transfer fees the same for mainland and free zone companies?

No. UAE share transfer fees vary by authority, jurisdiction, and transaction type. Additional charges may apply for notarization, document attestation, or professional assistance.