The mergers and acquisitions market in the UAE is one of the most developed in the Middle East, as local companies are more and more interested in expanding their businesses abroad. Also, foreign companies seeking for new investment opportunities have found the UAE to be one of the most attractive destinations because of its booming economy.
Mergers and acquisitions in Dubai fall under different legislations because of the Emirate’s free zone. For an onshore company, the Company Law applies, while for free zone companies special rules apply in accordance with the specific regulations of each free zone. Dubai International Financial Centre (DIFC) is most prolific free zone when it comes to M&A deals.
Amalgamation of companies in Dubai
The Dubai Company Law provides for the following types of company amalgamation:
- – the merger which implies the liquidation of two or more companies and the creation of a new one in which the dissolved companies’ assets and liabilities are gathered;
- – the acquisition which implied the liquidation of one or more companies and then the transfer of their assets and liabilities to an existing company.
No matter the type of amalgamation, any transaction must be approved by the Securities and Commodities Authority (SCA) in the case of joint stock companies in Dubai.
In the case of mergers, the companies must sign a merger agreement, which must be drafted in accordance with the UAE Civil Code.
The acquisition of a company can be done by a purchase of shares or assets. Share acquisitions imply the purchase of shares in a company, while asset acquisitions imply only the purchase of the assets in a company during the amalgamation.
Our lawyers give you more information about mergers and acquisitions in Dubai in the following video:
Taxation of mergers and acquisitions in Dubai
Dubai has a very advantageous M&A market due to its taxation system, as a % corporate tax is levied in the UAE. Also, merger and acquisition deals are also exempt from other taxes such as the value-added tax and the stamp duty. Also, Dubai does not impose any withholding taxes to such transaction. However, in the case of cross-border M&A transactions, one should pay attention to the tax legislation of the foreign company’s home country.
For assistance in merger and acquisition transactions, do not hesitate to contact our lawyers in Dubai.