Free zone establishments, otherwise known as free zone companies (FZEs) are a significant factor in the UAE economy. Establishing an FZE helps foreign investors to fully own a business in UAE. However, depending on business requirements, the owner of an FZE may be required to transfer the shares of the company to another person or another entity. This article gives a detailed guide on the share transfer course of and formalities for FZE company Dubai.
Types of Share Transfers for an FZE
In most cases, there are two major kinds of share transfers possible for an FZE:
- Internal Share Transfer: This involves the switch of shares from an existing shareholder of the FZE to either a new or another existing shareholder. Shareholders can be individuals or corporate groups including existing and new ones.
- External Share Transfer: This involves selling any percentage of the shares of an FZE to an individual or persons who had no previous investment with the FZE. This often happens where the whole FZE is being transferred to another party owner.
Transfer Shares of a Free Zone Establishment Process
Depending on the various free zones, the conditions that may be required to transfer shares could be slightly different; nevertheless, some of the general procedures include the following:
- Obtain board of directors and shareholder approval – The board of directors of the company and the existing shareholders approve the proposed transfer of the shares.
- Amend corporate documents – The FZE’s MOA and AOA must be updated to reflect the change in ownership.
- Application to the Free Zone Authority – As per the above plan and documents stated the FZE is required to file an application to the related Free Zone Authority such as DMCC, DAFZA etc.
- KYC on the new share holder – An analysis of the new share holder is conducted in accordance with the anti-money laundering laws.
- Apply for the NOCs – A No Objection Certificate (NOC) should be obtained from the relevant authorities regulating the type of industry that the FZE intends to undertake.
- Stamp share transfer agreement UAE- Another requirement is that the shares transfer agreement must be stamped.
- Maintain the share records – The records of the share ownership are adjusted to reflect the new shareholding structure of the FZE.
- Issue share certificate – The new shareholder is issued with new share certificates.
- Original transfer documents – It is a mandatory requirement that the free zone authority must produce evidence to ascertain completion of the transfer.
The time that it takes to get the approval differs with the free zone, though common duration ranges between 2-4 weeks once all the documents have been processed. To manage this process, the help of legal consultants in UAE is sometimes necessary.
FZE Share Transfer Ownership Requirements
Main Documents Required for buying shares in Dubai includes:
Table: Share Transfer For an Individual
| Document | Requirement |
|---|---|
| Passport Copy | Required |
| Residence Visa & Emirates ID | If available |
| No Objection Certificate | If employed in another company |
| Proof of Address | Required |
Table: Share Transfer for a Corporation
| Document | Requirement |
|---|---|
| Certificate of Incorporation | Notarized and attested |
| MOA & AOA | Notarized and attested |
| Board Resolution | Notarized and attested |
| Power of Attorney | Notarized and attested |
| MOA & AOA | Notarized and attested |
| Specimen Signature | Notarized and attested |
| Passport Copy of Director | Required |
| Share Capital & UBO Details | Required |
This table summarizes the key documents required for share transfer to both an individual and a corporate entity in the UAE. All documents need to be properly notarized and attested as per legalization requirements.
FAQs
Question: Can shares be transferred to a new company?
Answer: Yes, it is possible to transfer FZE shares to another existing company. However, the new corporate shareholder also has to have a license to undertake business in the same free zone.
Question: What is the maximum share that can be transferred?
Answer: In most Free Zones, including DMCC and DAFZA, it is possible to transfer the entirety of shares or some of the shares in the FZE with the consent of the original shareholder as well as in compliance with the set regulations.
Question: Can shares be transferred to a foreigner?
Answer: Yes, FZE shares can be sold or transferred to any foreign individuals or corporates under free zone regulation. However, the new shareholders have to fulfil certain residency requirements to manage the FZE.
Conclusion
The transfer of shares of a Free Zone Establishment in the UAE enables a change in business ownership which is essential for succession planning of the business. The it is vital to adhere to the requirements of each free zone to ensure a seamless transfer. Therefore, companies seek to buy shares in Dubai are advised to avail professional PRO Service advice to effectively ensure compliance with statutory regulations and obtaining approval. Thus, contact us today and we shall be glad to assist you.
Read More: The Importance of PRO Services in UAE 2024
