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Share transfer is the process of transferring shares in a company from one individual or entity to another. This transfer could be between an existing shareholder (individual or corporate) or a new party (individual or corporate).
Companies can go through restructuring or challenging phases in which such share transfers become crucial for resilience. The process for share transfers might sound straightforward, but can often be difficult to navigate. There are layers of legal, financial, and operational considerations associated with share transfers and hence, require in-depth knowledge of the company’s framework and UAE’s regulatory landscape.
Whether the share transfer is a strategic decision or an exit strategy, Stratrich can ensure a clean and smooth process for the individuals and the corporate entities.
There are numerous reasons why share transfer is the way forward for the growth of the organisation:
Share transfers are a common scenario when companies have a new investor to infuse capital or business expertise.
Transferring shares in case of a business merger or acquisition.
These happen in businesses that are family-owned and the owners transfer shares to the next generation. These shares may be gifted or inherited within families.
In this case, original investors or shareholders decide to sell their stakes in the company to realise a profit or liquidate their investment.
Shares are transferred to settle any outstanding debts or other financial arrangements.
It is important to ensure that all share transfer processes adhere to the UAE’s regulatory framework. We ensure that all legal processes are addressed, from drafting and reviewing transfer agreements to obtaining approval by liaising with regulatory bodies.
Transfer of shares can have significant financial repercussions for a company. We help both parties understand these implications, any potential tax consequences, valuation considerations, etc.
Share transfers may lead to a change in the operational structure of a company. We ensure this shift is smooth, with minimal disruption to the company’s daily operations.
The complexity of the Share Transfer process makes it imperative to have experts to guide you. Our team is competent in guiding shareholders and companies through the intricate process of share transfers. We offer holistic services that ensure a successful share transfer while mitigating any potential risk. Transferring shares in a company in the UAE requires certain documentation, approval and compliance.
Our team of experts shall assist you in identifying the required documents. Further, based on the type of share transfer, we shall assist you in achieving the legally required document attestation levels.
We begin the Share transfer process with the physical submission of the application to the Department of Economic Development (DED).
DED will send initial approval once it receives the application and verifies the details.
The Share Transfer Agreement and Amendment to the MOA will be drafted. This document defines the details of the new shareholder, the number of shares being transferred, the sale price and any other transfer details.
The Share Transfer Agreement and Amendment to the MOA of the company must be formally notarized and signed by all existing and new shareholders. After the notary, the company officially adopts the new shareholder structure and distribution of shares.
The final step is to submit the notarized documents to DED for registration.
The DED will issue a payment voucher for the government fees. Once the fee is paid, the amended incorporation documents of the company shall be generated and shared electronically.
The share transfer process includes obtaining documents from new shareholders, preparing and signing forms, submitting resolutions, and filing these with the registrar.
New shareholders must provide a passport copy and personal identification. If the shareholder is a corporation, documents like the Certificate of Incorporation, Articles of Association, and Memorandum of Association are needed.
Once all documents are submitted, it takes around one week to come in effect.
The share transfer fees include a processing cost of AED 3,000, AED 500 for amending the Articles of Association, and an additional AED 10 each for "Knowledge dirham" and "Innovation dirham”. Additionally, there could be fees from the relevant authority for the license renewal.
There are not many differences between the two. The Freezone companies need notarized and attested resolutions from existing shareholders, whereas mainland companies have specific document requirements set by the Department of Economic Development.
Yes, banks must be informed of any changes in shareholding. If less than 50% of shares are transferred, the existing account remains active. If 50% or more shares are transferred, the bank may require the current account to be closed and a new one opened.
It’s essential to submit all necessary documents and payments to ensure a compliant shareholder update. Failure to update the registrar may lead to legal and financial complications, including penalties and invalidation of the transfer.
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