Business restructuring and M&A in UAE

1) In what forms can the reorganization of a legal entity be carried out?

In UAE, the reorganization of a legal entity can be done in 5 different ways:

• conversion;
• acquisition;
• merger;
• split / division;
• company divestiture,
  which is explained in Federal Decree Law No: (32) of 2021 on Commercial Companies from Article 275 to 301.

2) What are the procedures for the division or merger of a company?

The procedure for the division or merger of a company in UAE is explained in Article 285 to 298 of Federal Decree Law No: (32) of 2021 on Commercial Companies:

• The company’s Board of Directors must pass a special resolution approving a merger or division.
• The companies should enter into a merger agreement.
• The Directors or managers of both the companies should present the draft of the merger agreement in the general assembly to obtain approval from the majority of the members.
• Every merging Company or merged Company shall notify its creditors within 10 [ten] business days after approval of the merger agreement in the General Assembly and provide them with an opportunity to object the merger or division.
• Get approval of the merger resolution by the Ministry of Economy or from the Securities and Commodities Authority (SCA), or the relevant regulatory authority, as applicable.
• Inform the Registrar to update the records accordingly.
• Obtain new Registration Certificates.

3) How to separate a specific type of activity into an independent company?

• Determine the type of new Company.
• The Company’s Board of Directors should prepare a detailed draft plan for Company Divestiture for submitting it in the General Assembly and obtain approval from the members.
• The company's board of directors shall obtain no objection from the Ministry of Economy or from Securities and Commodities Authority (SCA), or the relevant regulatory authority, as applicable.
• Amend the Memorandum of Association and Article of Association, if required.
• Register the new Company.
• Enter into a sale and purchase agreement with the new company to transfer the assets and liabilities.

4) Is it possible to reorganize a company in case of bankruptcy?

Yes, it is possible to reorganize a Company in case of insolvency, which is explained in “The Federal Decree Law No. (51) of 2023 promulgating the Financial and Bankruptcy Law”.

5) Which government agencies' approvals should be obtained for mergers and acquisitions?

For mergers and acquisitions, the companies should obtain approval from the following government agencies:

• Ministry of Economy of UAE, or the respective Economic Department in the relevant Emirate;
• Securities and Commodities Authority (SCA), for companies licensed and regulated by SCA;
• From the Central Bank of the UAE (CBUAE), for those companies licensed and regulated by CBUAE;
• From the relevant competent regulatory authority, when applicable.

Author: Issam Dahman