Modification in Share Percentage

How to modify share percentage/ shareholder structure?

Fimkin suggests to always select a legal structure for your business when you form it, making sure it meets all requirements. The shareholder structure that appears to be best for your company now might not be able to support your needs tomorrow, and you may choose to replace your current shareholders at any time during a review.

As a responsible business owner, you must periodically assess whether the original business structure still best serves the needs of the company. You may find that your company’s shareholder structure needs to be changed. There are specific situations in which a Dubai or other UAE company needs to change its shareholders. Certain details in the process and documentation for this kind of modification depend on the type of company and where it is registered (free zone or mainland).

In addition, the specific free zone under which the company is registered and other relevant details if it is a free zone. For the time being, let’s avoid getting into the specifics of any one free zone and instead concentrate on the fundamental paperwork, actions, and protocols needed to alter the ownership structure of UAE businesses.

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How the share increase or decrease happens and what documentations are required to finish the transactions ?

  • Assemble the new shareholder's pertinent documentation

  • Prepare the resolutions and share transfer forms

  • Acknowledge the new shareholder(s) by properly signing the transfer forms and resolutions

  • Obtain the most recent version of the records from the registry

  • If the new shareholder is a live individual, the necessary paperwork would include a copy of their passport and other forms of identification. In the event that the shareholder is a different company, corporate records for that company, together with director and shareholders

Share Transfer Documentation

There are two stages to the share transfer process. Let’s list the documents that are needed at every phase.

Initial approval

The businessperson must now provide a request letter, signed by the Manager-In-Charge, specifying the desired transaction type and its details, along with a copy of their commercial license or a notarized Certificate of Incorporation.

Transfer of Shares

A resolution passed by the current shareholders of FZ-LLC (notarized and attested at the UAE embassy level)

A board resolution from the recently acquired corporate shareholder that has been notarized and endorsed by the UAE embassy. The share transfer form, properly signed by both the buyer and seller, must be notarized and endorsed by the UAE embassy.

Each new shareholder’s RIC Form for Corporate Person and undertaking letter for activity

Shareholders Particulars

Details Concerning Shareholders

Scenario 1: A foreign company that is not based in the United Arab Emirates is the new shareholder.

  • Original or Notarized Certificate of Incorporation
  • Original or notarized Certificate of Good Standing
  • Articles of Association (notarized) and Memorandum of Association (MoA)

Scenario 2: A UAE company is the new shareholder.

A copy of the articles of association (AoA) and the memorandum of association (commercial license)Send the complete set of properly signed paperwork, the appropriate forms, the relevant registry, and the necessary payment to request a modification to the shareholder structure. You will receive updated corporate documents verifying the new shareholder(s) from the registry in about a week.

How much is the Fees for Share Transfers/ Share Change

AED 3,000 for each transaction processed. AED 500 is the fee for amending the association’s articles.

Extra Cost: Each transaction will cost an additional AED 10 in “Knowledge Dirham” and AED 10 in “Innovation Dirham.”

  • Stage 1 : Duration: 10 working days for Stage 1
  • Stage 2: Three business days

Is there any additional conditions for changing the shareholding structure

The share transfer form basically consists of the company’s data, the percentage of shares that are to be transferred to the new shareholders, the details of the existing and new shareholder(s), and signatures, depending on the requirements of each specific authority under which the company is registered. The absence of any outstanding payments for the UAE company license and other government fees, along with the validity of the license and other corporate documents, are prerequisites that must be met in order for the shareholder change to proceed. The authority of the new shareholders must successfully complete the KYC procedure as a further prerequisite.

Effects on Corporate Banking

Notifying your bank of the change in the ownership structure of your UAE-based business is essential. If the change only affects less than 50% of the company’s shares, the business can carry on with its banking operations and the bank can just accept the new shareholders’ documentation. On the other hand, banks typically request to close an account during the shareholders change process and reopen one once the change is complete if the percentage of shareholding transfer is 50% or more. This is because the company must conduct additional due diligence if it has more than 50% new shareholders.

Fimkin is always excited to bring you the best convenience by assisting you for your Share Capital modifications. It cannot be more relaxed to understand that your major business changes are being assisted by a top class Consultancy in UAE.