Memorandum Of Understanding For Share Transfer Template for the United Arab Emirates

When you're planning to transfer shares in a UAE company, a Memorandum Of Understanding For Share Transfer serves as your essential preliminary document. This agreement establishes the framework for your intended share transfer before you proceed with the formal share purchase agreement, ensuring all parties understand the proposed transaction's key terms and regulatory requirements under UAE law.

When do you need this document?

You need this MOU when you're entering negotiations for a share transfer in any UAE company, particularly when the transaction involves complex terms, foreign investors, or requires regulatory approvals. It's essential when you're dealing with companies in sectors subject to foreign ownership restrictions under UAE Federal Decree-Law No. 19 of 2018, or when the shares belong to public joint-stock companies regulated by the Securities and Commodities Authority. You'll also need this document when multiple stakeholders are involved, including board approvals, regulatory clearances, or due diligence processes that may take several weeks or months to complete. The MOU provides certainty and structure during these preliminary negotiations while protecting your interests before committing to a binding share purchase agreement.

Key legal considerations

Your MOU must clearly define the shares being transferred, including their class, number, and percentage of total shareholding in the company. You need to specify the proposed consideration and payment terms, ensuring they comply with UAE valuation and transfer pricing requirements. Include comprehensive conditions precedent covering due diligence completion, regulatory approvals, and board resolutions required under the UAE Commercial Companies Law. Address confidentiality obligations to protect sensitive commercial information during negotiations, and establish exclusivity periods preventing the transferor from negotiating with other potential buyers. Consider including provisions for expense sharing, particularly for regulatory filing fees and legal costs associated with obtaining necessary approvals from UAE authorities.

Legal requirements in United Arab Emirates

Under UAE Federal Law No. 32 of 2021, your share transfer must comply with the company's articles of association and may require board approval depending on the shareholding percentage being transferred. If foreign investors are involved, you must ensure compliance with the Foreign Direct Investment Law, particularly regarding permitted foreign ownership percentages in your company's sector. For public companies, additional Securities and Commodities Authority regulations apply, including disclosure requirements and trading restrictions. Your MOU should reference the need for obtaining any required regulatory approvals, including from the Department of Economic Development in the relevant emirate. The document must also address UAE Commercial Transactions Law requirements for commercial agreements, ensuring proper execution, witnessing, and notarization where required. Consider including provisions for dispute resolution through UAE courts or approved arbitration centers, as mandated by local jurisdiction requirements.