The mergers and acquisitions (M&As) market in the UAE is one of the most developed in the Middle East and North Africa (MENA) region. Even if the UAE does not have a specific legislation covering M&A transactions, in each Emirate the Company Law provides for such types of transactions. In Dubai, mergers of onshore companies are governed by the Company Act, while mergers of free zone companies are governed by the Financial Free Zone laws. Special laws apply with respect to oil and gas companies and financial institutions.
Our specialists in Dubai can provide you with more information regarding the Company Act’s provisions on mergers.
Companies in Dubai can undergo the following types of merger transactions:
The Dubai Commercial Code defines a merger as “the dissolution of two or more companies and the incorporation of a new company” which will gather the liabilities of all dissolved entities. In this case, the new company will acquire the rights and obligations of the old companies that no longer exist. In the case of public companies, the mergers must be authorized by the Securities and Commodities Authority.
As mentioned above, apart from the Commercial Law, Dubai free zones have an additional set of laws providing for mergers. One of the most prolific free zones is the Dubai International Financial Centre (DIFC) which in the last few years allowed for several M&As to be carried out. The laws governing mergers in the DIFC are the Markets Law and the Takeover Rules Module. The last law provides for public companies registered in the DIFC and listed on the UAE Stock Exchange.
The first step for concluding a successful merger is the due diligence procedure during which the acquiring company and the target company verify each other. The second step implies an agreement between the shareholders of both companies. Then the companies must announce the offer to the public and consult with the employees.
If you need information about the documentation to be prepared in case of merger transactions, do not hesitate to contact our company formation agents in Dubai.