Transfer Shares of a Free Zone Establishment in UAE

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 the 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 process and formalities for an FZE company in 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.

 

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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 shareholder – An analysis of the new shareholder 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 share 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 the common duration ranges between 2-4 weeks once all the documents have been processed. To manage this process, the help of legal consultants in the UAE is sometimes necessary. 

FZE Share Transfer Ownership Requirements

Main Documents Required for buying shares in Dubai include:

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 corporations under the 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. It is vital to adhere to the requirements of each free zone to ensure a seamless transfer. Therefore, companies seeking to buy shares in Dubai are advised to avail professional PRO Service advice to effectively ensure compliance with statutory regulations and obtain approval. Thus, contact us today and we shall be glad to assist you.

Read More: The Importance of PRO Services in UAE 2024