TRW & Co · Banking, Finance & Capital Markets
Private Equity Transactions in the UAE
Private equity in the UAE combines federal company law, free zone and DIFC or ADGM vehicles, sector regulators with change-of-control powers and an active merger control regime. The 2025 company law reforms and the move from the SCA to the Capital Market Authority have changed how sponsors structure, approve and exit their investments.
Key pointRegulatory approvals, not negotiation, usually set the timetable: a minority stake with veto rights can be a notifiable concentration, and sector regulators often take longer than merger control.
At a glance
Merger control thresholds
Since 31 March 2025, deals are notifiable where combined UAE turnover in the relevant market exceeds AED 300 million or market share exceeds 40%.
Standstill before completion
Notifiable deals must be filed at least 90 days before completion, with a 90-day review extendable by 45 days and no closing meanwhile.
Takeover thresholds
For listed public joint stock companies, crossing 30% triggers a mandatory offer and a bidder holding 90% may squeeze out the minority.
Company law reforms
Since late 2025, mainland companies can issue share classes, embed drag and tag rights and redomicile between jurisdictions.
Tax on holding structures
Corporate tax is 9% above AED 375,000, with a participation exemption for qualifying shareholdings of at least 5% held for 12 months.
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What private equity in the UAE involves
Private equity in the UAE spans majority buyouts, minority growth investments, take-privates of listed companies, co-investments alongside sovereign and government-related investors, and the acquisition of family businesses that are professionalising or preparing for succession. Sponsors range from global funds with Gulf offices to regional managers, family offices and the investment arms of large conglomerates.
The legal work has a recognisable shape: structure the acquisition vehicle, diligence the target, secure regulatory approvals, negotiate the purchase and shareholder documents, finance the deal, incentivise management and, eventually, exit. What makes the UAE distinctive is the number of overlapping systems: federal company law onshore, separate free zone regimes, common-law DIFC and ADGM vehicles, sector regulators with change-of-control powers and a merger control regime with real teeth.
The legal questions are rarely abstract. They arrive as a sponsor asks whether a founder's side agreements will survive closing, whether a licence can transfer, whether a filing will delay completion, or whether a minority stake gives enough control to protect the investment.
The legal framework for private equity in the UAE
Company law and foreign ownership
Onshore targets are governed by Federal Decree-Law No. 32 of 2021 on Commercial Companies, as amended by Federal Decree-Law No. 20 of 2025 with effect from late 2025. Since the 2020 and 2021 reforms, most onshore activities can be 100% foreign-owned, subject to a list of strategic-impact activities and emirate-level rules. Our foreign direct investment page explains the remaining restrictions.
The 2025 amendments are useful to sponsors. Mainland LLCs may issue registered share classes; drag-along and tag-along rights can sit in the constitutional documents; private joint stock companies may make private placements; and companies may redomicile between emirates or between the mainland and free zones while keeping their legal personality. Together, these make onshore targets easier to hold and to sell.
Listed targets and takeover rules
Public joint stock companies listed on the Abu Dhabi Securities Exchange or Dubai Financial Market are subject to the SCA's Rules of Merger and Acquisition for Public Shareholding Companies, Resolution No. 18/R.M of 2017. Under those rules, acquiring more than 30% of a target triggers a mandatory offer, and a bidder at 90% can squeeze out the minority. Since 1 January 2026 the Capital Market Authority has replaced the SCA under Federal Decree-Law No. 33 of 2025, and existing SCA rules continue until replaced. The DIFC and ADGM have their own takeover rules for companies listed or incorporated there.
Merger control
Federal Decree-Law No. 36 of 2023 on the Regulation of Competition, with Cabinet Resolution No. 3 of 2025 in force from 31 March 2025, requires notification of economic concentrations where the parties' combined UAE turnover in the relevant market exceeded AED 300 million in the last financial year or their combined market share exceeds 40%.
Filing goes to the Ministry of Economy and Tourism at least 90 days before completion, the review runs 90 days from a complete filing, extendable by 45, and the parties must not complete in the meantime. Acquisitions of minority stakes with veto rights can amount to control, so sponsors should test their reserved matters. See our merger control practice.
Sector regulators
Many attractive targets are regulated. Acquiring a stake in a bank, insurer, payment provider or finance company requires Central Bank of the UAE approval of the change in control; healthcare, education, telecoms and aviation businesses have their own licensing authorities. Free zone targets need the free zone authority's consent for share transfers. These approvals often take longer than merger control and drive the timetable.
Tax
UAE corporate tax applies at 9% on taxable income above AED 375,000. The participation exemption can exempt dividends and capital gains on qualifying shareholdings, broadly where at least 5% is held for 12 months, and qualifying free zone persons may benefit from a 0% rate on qualifying income. Holding structures, management fees and acquisition debt all need modelling against the Federal Tax Authority rules. Our corporate tax page has the detail.
Deal structures compared
Choosing the right structure is the first commercial decision for private equity in the UAE, and it shapes approvals, documents and exit options.
| Structure | How it works | Key legal points | Timetable drivers |
|---|---|---|---|
| Share purchase of a mainland LLC | Sponsor's vehicle buys shares from founders | Notarised transfer, amended memorandum, licence update; pre-emption of other shareholders | Notarisation, licensing authority and any sector approval |
| Acquisition via a DIFC or ADGM holdco | Founders roll into a common-law holding company above the operating group | English-style shareholders' agreement and articles; courts familiar to investors | Holdco set-up and reorganisation of onshore subsidiaries |
| Minority growth investment | New shares issued to the sponsor with protective rights | Share classes, reserved matters, exit rights; may still be a notifiable concentration | Shareholder approvals, registry filings and merger control |
| Take-private of a listed company | Offer to all shareholders of a listed PJSC | Takeover rules, mandatory offer at 30%, squeeze-out at 90%, disclosure | CMA and exchange process, offer timetable |
| Carve-out from a group | Business or assets transferred into a new company and sold | Employee transfers, licences, contracts requiring consent, transitional services | Licence transfers and third-party consents |
The transaction process
- Preliminary structuring. Map the target's entities, licences and regulators, decide the acquisition vehicle and identify filings that could affect timing.
- Letter of intent and exclusivity. Agree price mechanics (locked box or completion accounts), key protections, exclusivity and confidentiality.
- Due diligence. Legal, financial, tax, commercial and, increasingly, cyber and ESG diligence. Prioritise issues that change price or structure.
- Negotiate the SPA and shareholders' agreement. Warranties, indemnities, conditions, leakage protection, restrictive covenants, governance and exit rights.
- Arrange financing. Equity commitments, acquisition debt, security over target assets and any Sharia-compliant tranches.
- Obtain approvals. Merger control, sector regulators, free zone authorities, landlords and key counterparties whose contracts contain change-of-control clauses.
- Complete. Funds flow, share transfers notarised or registered, licences and beneficial ownership registers updated, management incentive plan implemented.
- Integrate. Board reconstitution, policies, reporting and a 100-day plan that addresses diligence findings.
Acquisition finance and security
Leverage for private equity in the UAE comes from regional banks, international lenders and, increasingly, private credit funds operating from the DIFC and ADGM. Lenders will want security over the shares in the acquisition vehicle and, where possible, over the target's assets and receivables. Onshore, security over movable assets is perfected by registration under the federal movable security framework, while share pledges over mainland companies require registry and notarisation steps.
DIFC and ADGM security is registered with the relevant registrar. Financial assistance restrictions in the target's jurisdiction can limit upstream guarantees, so debt push-down needs careful planning. Our secured lending page explains the options.
Sharia-compliant tranches, typically murabaha or ijara-based, are common where regional banks participate. They change documentation and the way interest-like returns are expressed, but rarely the core commercial terms. Build Islamic structuring into the term sheet rather than retrofitting it.
Due diligence and the documents that matter
Diligence for private equity in the UAE consistently turns up the same themes. The target may hold licences in a founder's personal name; historic nominee or side arrangements may sit outside the register; related-party contracts may be undocumented; and employment and visa compliance may lag behind growth. Sponsors should ask for:
- all trade, commercial and sector licences, with the licensed activities checked against the business;
- constitutional documents, registers and beneficial ownership filings, and any nominee or side agreements;
- material contracts, especially government contracts, distribution and agency agreements, and anything with change-of-control or exclusivity terms;
- real estate leases and Ejari or equivalent registrations for key sites;
- employment contracts, end-of-service liabilities, Emiratisation compliance and visa records;
- corporate tax registration, VAT returns, transfer pricing documentation and free zone qualifying-income analysis;
- litigation, cheque-related claims, regulatory correspondence and data protection records.
Warranty and indemnity insurance is increasingly used on UAE deals, particularly on secondary sales between sponsors. Underwriters will exclude known issues, so diligence findings still need specific indemnities or price adjustments. See our mergers and acquisitions page for the wider process.
A locked-box price only works if leakage is defined tightly. In founder-run UAE businesses, payments to related parties, family members and personal expenses through the company are common. List permitted leakage item by item, and back the covenant with a pound-for-pound indemnity.
Management, governance and exits
Management incentives
Sponsors typically align management through sweet equity, ratchets or option plans in the holding company. These must work with UAE employment law, including end-of-service gratuity, and with the holding jurisdiction's company law. Good leaver and bad leaver definitions should match the grounds for termination in the employment contract; if they do not, disputes follow. Our executive employment practice coordinates both sides.
Governance rights
A minority sponsor relies on reserved matters, board representation, information rights and a deadlock mechanism. Onshore, these rights are more robust when embedded in the articles, and the 2025 reforms make that easier. In DIFC and ADGM structures they sit in a common-law shareholders' agreement and articles enforceable before the DIFC or ADGM Courts. Our corporate governance page covers board practice.
Exit routes
Exits for private equity in the UAE take four main forms: trade sale, secondary sale to another sponsor, listing on ADX, DFM or an international exchange, and recapitalisation. The 2025 private placement rules for private joint stock companies and an active IPO market have widened the options. Drag rights, IPO cooperation covenants and conversion mechanics should be in place from day one. See our IPOs and listings practice.
Exit preparation should start at least a year before a planned sale. A vendor due diligence report, a clean licence and ownership position and a data room organised around buyer questions shorten the process and protect price. Where a portfolio company sits in a structure that buyers find awkward, such as a mainland LLC owned through several layers, the 2025 redomiciliation rules may allow a move into a free zone or between emirates without transferring assets one by one. That option depends on implementing regulations and the consent of both licensing authorities, so test it with the regulators before relying on it in an exit plan.
Management should also be told early how the exit will treat their equity, because uncertainty about leaver valuation is one of the most common causes of late-stage friction.
In UAE buyouts, the approvals map is the timetable. Find every regulator and consent on day one, and the rest of the deal follows.
Risks and common mistakes
Treating a minority stake as outside merger control
Sponsors sometimes assume that a minority investment cannot be a notifiable concentration. Under UAE competition law the question is whether the investor acquires the ability to influence the target's decisions, and veto rights over the budget, business plan or senior appointments can be enough. With the AED 300 million turnover threshold applied to the relevant market, many mid-sized deals now qualify. Filing late or completing during the standstill exposes the parties to fines calculated on UAE revenue. Assess control and thresholds early and build the 90-day review into the long-stop date.
Missing a regulated activity in the target group
A target described as a technology or services business may hold a payments, insurance-broking, healthcare or education licence somewhere in its group. Each can require prior approval of a change in control from the relevant regulator, and completing without it can put the licence at risk. Diligence should list every licence in every entity and flag which regulators must approve the deal. Conditions precedent in the SPA should track each one specifically.
Relying on founder side letters and nominee arrangements
Older UAE businesses sometimes used nominee shareholders or informal profit-sharing to satisfy previous ownership rules. These arrangements can survive in practice long after the law changed. A buyer that does not unwind them before closing may inherit claims from nominees or their heirs. Diligence should ask directly, and the SPA should require clean-up, with specific indemnities for any residual risk. Our shareholder disputes team sees the consequences when this is missed.
Under-documenting management equity
Management incentive plans are often agreed on a slide deck and documented later. When a manager leaves before documents are signed, disputes about vesting and leaver valuation are almost inevitable. Document the plan at completion, ensure the plan rules and employment contracts use consistent definitions and consider how end-of-service benefits interact with equity value on a leaver event.
Choosing a forum the counterparty can avoid
A shareholders' agreement governed by English law with arbitration abroad may look neutral, but enforcement against UAE assets still runs through UAE courts. Sponsors should choose the governing law and forum with enforcement in mind: DIFC or ADGM courts, a UAE-seated arbitration, or a foreign seat whose awards UAE courts will recognise under the New York Convention. Our debt restructuring page covers related lender issues.
Cross-border private equity deals
Most private equity in the UAE involves a foreign sponsor, foreign co-investors or a target with operations outside the country.
Saudi Arabia and the GCC. Many UAE platforms are bought to expand into Saudi Arabia. Saudi merger control, foreign investment licensing and regional headquarters policies can all affect deal value, and parallel filings are common.
India and Bangladesh. UAE-based groups often own operating subsidiaries in India or Bangladesh. Indian and Bangladeshi foreign exchange and investment rules affect indirect transfers, pricing and repatriation. Bangladeshi founders selling UAE holdcos should confirm their home-country position before signing.
United Kingdom and Singapore. UK and Singapore sponsors and lenders often expect English-law documents. DIFC and ADGM vehicles accommodate that, while onshore targets need local-law transfer documents alongside the English-law SPA.
China. Chinese investors may need outbound investment approvals at home, which should be reflected in conditions and long-stop dates.
Fund-level marketing. Sponsors raising capital from UAE investors for a new fund or a single-asset co-investment vehicle are marketing a financial product. That triggers the onshore Capital Market Authority rules and, in the free zones, DFSA or FSRA rules. Co-investment offers made to family offices are a frequent blind spot. Our guide to financial promotions sets out the routes.
Sanctions and AML screening. Cross-border deals for private equity in the UAE involve layered ownership, and UAE banks will screen every ultimate beneficial owner before releasing funds. Prepare ownership charts and source-of-funds evidence early to avoid delays at completion.
How TRW & Co supports private equity in the UAE
We advise sponsors, co-investors, family offices, founders and management teams on private equity in the UAE across the deal cycle, from the first structuring call to exit. Where representation before UAE onshore courts or the DIFC/ADGM Courts is required, we work alongside locally licensed advocates and registered practitioners.
Structuring and approvals mapping
We map entities, licences and regulators on day one, design the acquisition structure and set a realistic timetable around merger control and sector approvals.
Legal due diligence
We run red-flag and full-scope diligence focused on licences, ownership, contracts, employment and tax, and translate findings into price, conditions and indemnities.
Transaction documents
We draft and negotiate SPAs, investment and shareholders' agreements, articles and local transfer documents, coordinating English-law and UAE-law workstreams.
Management equity
We design incentive plans, leaver provisions and employment terms that work together and with the holding structure.
Regulatory filings
We prepare merger control notifications and coordinate change-of-control applications with the Central Bank and other sector regulators.
Exit readiness
We prepare portfolio companies for sale or listing: clean-up, redomiciliation where useful, governance upgrades and vendor diligence.
Checklist for sponsors and sellers
- Have we listed every entity, licence and regulator in the target group?
- Does the deal meet the AED 300 million turnover or 40% market share test, and do our veto rights confer control?
- Which sector regulators or free zone authorities must approve the change in control?
- Are nominee arrangements, side letters and related-party contracts identified and unwound?
- Is leakage defined item by item in a locked-box deal?
- Do management equity terms match employment contracts and UAE end-of-service rules?
- Have we modelled corporate tax, the participation exemption and free zone status for the holding structure?
- Will our chosen forum and governing law produce a judgment or award enforceable against UAE assets?
To discuss a transaction, contact TRW & Co, or browse all of our practice areas.
Frequently asked questions
01Does a minority private equity investment need merger clearance in the UAE?
It can. UAE competition law looks at whether the acquirer gains the ability to influence the target, and veto rights over the budget, business plan or senior appointments can amount to control. If the parties exceed AED 300 million combined turnover in the relevant UAE market, or 40% combined market share, the deal must be notified at least 90 days before completion and cannot close during review. Test both control and thresholds at the term sheet stage.
02How long does a typical UAE buyout take?
Simple share purchases of unregulated mainland or free zone companies can close within a few months of signing. Deals needing merger control face at least the 90-day review period, extendable by 45 days, plus preparation time. Acquisitions of banks, insurers or payment firms require Central Bank approval, which can take longer. Notarisation, licence amendments and third-party consents add time. The best predictor is the approvals map prepared at the outset, not the complexity of the negotiation.
03Can a foreign sponsor own 100% of a UAE company?
For most onshore activities, yes. The Commercial Companies Law reforms removed the general requirement for a UAE national shareholder, subject to a list of strategic-impact activities and emirate-level conditions. Free zone companies and DIFC or ADGM companies have long allowed full foreign ownership. Regulated sectors such as banking, insurance and some defence-related activities still carry ownership or approval conditions, so each target should be checked activity by activity.
04What changed for listed company take-privates after the CMA replaced the SCA?
From 1 January 2026, the Capital Market Authority took over the SCA role under Federal Decree-Laws No. 32 and 33 of 2025. The SCA takeover rules, Resolution No. 18/R.M of 2017, continue to apply until the CMA replaces them, so the 30% mandatory offer threshold and 90% squeeze-out remain relevant. The new law strengthens enforcement on market abuse and disclosure, which matters for stakebuilding and leak management. Check for new CMA resolutions before launching any offer.
05Is warranty and indemnity insurance used on UAE deals?
Yes, increasingly, particularly for sponsor-to-sponsor sales and larger buyouts where sellers want a clean exit. Underwriters will expect a proper diligence report and will exclude known issues, certain tax risks and matters specific to the sector. That means specific indemnities, escrows or price adjustments are still needed for problems identified in diligence. The policy works best when it is considered early, so that the SPA warranty package and the underwriting process run together.
06Where should a sponsor hold its UAE investment?
Many sponsors use a DIFC or ADGM holding company above the operating group, because those centres offer common-law company law, English-style documents and courts familiar to international investors. Others hold directly in the mainland company, which the 2025 reforms have made more workable. Tax, the investor base, regulatory approvals and exit plans drive the choice. The participation exemption and qualifying free zone rules should be modelled before the structure is fixed.
Sources and official materials
- Ministry of Economy and Tourism: Economic concentration — Merger control notifications and thresholds
- Capital Market Authority — Regulator for listed companies and takeover rules onshore
- Federal Decree-Law No. 33 of 2025 on the Regulation of the Capital Market — Onshore capital markets statute in force since 1 January 2026
- Central Bank of the UAE — Change-of-control approvals for licensed financial institutions
- Federal Tax Authority — Corporate tax, participation exemption and free zone guidance
- UAE Legislation portal — Commercial Companies Law, competition law and amendments
General information only, current as at 27 October 2026. It is not legal advice and does not create a lawyer–client relationship. UAE law differs between the onshore jurisdiction, the DIFC, ADGM and the free zones, and changes frequently; check current official sources and take advice on the facts of your matter.
