The global pandemic has made every company thinking about their commercial status in the market propelling shareholders to take considerable decisions for the company to survive in the unfortunate market situation. Apart from options like de registration, bankruptcy or liquidation, some companies are considering the aspect of transfer of shares and accordingly Commercial Lawyers of Dubai consider it deem fit to enlighten our readers about the process of share transfer in companies registered within UAE mainland.
Federal Law number 2 of the year 2015 regarding Commercial Companies Law governs all sorts of companies registered within the country at a larger aspect, regardless of its type. One of the mandatory provision for all companies to abide is to draft the memorandum of association of the company. The said document is a constitution for the company highlighting the rights and responsibilities of shareholders, managers and directors of the company. In furtherance the document suggest the procedure for undertaking major decisions regarding the company such as transfer of shares, sale of shares and alike.
Most Companies except Joint Liability Companies are required to have a local shareholder holding 51% of the shareholding in the company as per Article 10 of the Commercial Companies Law. However, process of selling shares in each type of company may vary. Initiating with Limited Liability Company (LLC) which consists of a mandatory 51% UAE national shareholder and the rest 49% is acquired by the foreign expatriates. The shareholder in an LLC are authorized to transfer their shares to the other partner or an outsider to hold his shares in the company and such transfer of shares shall be in accordance with the provisions of Memorandum of Association of the company. It is further mandated that such transfer of shares is mentioned in the commercial register with Department of Economic Development in the relevant Emirate. In addition, the transfer of such shares shall be in accordance with Article 80 of the Commercial Companies Law in order to be accepted by the Department of Economic Development.
The decision of transfer of shares in a joint liability company shall be in consonance with the memorandum of association of the company and pursuant to Article 42 of the Companies Law. The preliminary step in transfer of shares in all companies shall be upon a mutual consent of all the partners of the company in a board meeting followed by a registration of share transfer in the companies register before the registrar. Wherein, Article 70 of the companies Law governs the transfer of shares in simple commandite companies, which is more or less similar to other companies and importantly in accordance with the memorandum of association.
At last, the transfer of shares in a public joint stock company is completely different as that of other companies as the transfer of shares is listed through transfer of tittle of shares in stock market and in accordance with the rules and regulations of the financial market or as in accordance with Article 211 of the Companies Law. In the event, you wish to seek more understanding on the procedures for share transfer in UAE, you must approach the Top Lawyers of Dubai for complete knowledge.
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