Valuation Engagement Letter Template for the United Arab Emirates

A Valuation Engagement Letter is a crucial legal document that formalizes the professional relationship between you and your valuation service provider in the United Arab Emirates. This agreement establishes the terms, scope, and conditions under which valuation services will be performed, ensuring both parties understand their rights and obligations throughout the engagement process.

When do you need this document?

You need a Valuation Engagement Letter when commissioning professional valuation services for various business purposes. This includes business valuations for mergers and acquisitions, asset valuations for financial reporting compliance, intellectual property valuations for licensing agreements, or real estate valuations for investment decisions. The document is particularly essential when valuations are required for regulatory filings with UAE authorities, court proceedings involving asset disputes, or when seeking financing where lenders require independent asset assessments. Companies operating in UAE free zones or mainland jurisdictions both require this documentation to ensure proper professional service delivery and legal protection.

Key legal considerations

Your Valuation Engagement Letter must clearly define the scope of services to prevent disputes over deliverables and professional responsibilities. The agreement should specify the valuation standards to be applied, typically International Valuation Standards (IVS) as recognized in the UAE, and identify the intended users and purposes of the valuation report. Professional liability limitations and indemnification clauses protect both parties from potential claims arising from the valuation process. The letter must establish clear timelines for information provision by your company and delivery of the final valuation report. Payment terms, including fee structure and billing arrangements, should be explicitly stated to avoid commercial disputes. Additionally, confidentiality provisions are crucial given the sensitive nature of financial and business information exchanged during the valuation process.

Legal requirements in United Arab Emirates

Under UAE Federal Law No. 2 of 2015 (Commercial Companies Law), professional service agreements must comply with specific contractual requirements governing commercial relationships. Your Valuation Engagement Letter must align with UAE Federal Law No. 18 of 1993 (Commercial Transactions Law), which regulates professional services contracts and establishes legal frameworks for payment terms and service delivery. If your valuation relates to audited financial statements, compliance with UAE Federal Law No. 12 of 2014 (Auditing Profession Law) may be required, particularly regarding professional standards and liability. The engagement must reference applicable IFRS standards as adopted in the UAE for financial reporting valuations. For companies subject to regulatory oversight, such as those governed by Securities and Commodities Authority regulations, additional compliance requirements may apply to ensure the valuation meets regulatory standards for public disclosure or transaction approval purposes.