Investors arriving with a London- or New York-style shareholders' agreement (SHA) often assume it will work in a Dubai mainland company the way it works at home. It will bind the people who sign it. It will not bind the licensing authority, the company's register or third parties — those look at the registered Memorandum of Association (MOA). A UAE joint venture therefore needs two documents that are drafted together: the SHA for the private deal, and an MOA that carries every term that must be enforceable against the company and the registrar.
The legal reason: the register decides
Federal Decree-Law No. 32 of 2021 on Commercial Companies is explicit:
- The MOA and each amendment are drawn up in Arabic; if a second language is used, the Arabic text governs in the UAE (Art. 14).
- An MOA amendment that is not registered cannot be invoked against third parties (Art. 15).
- A share transfer is made in line with the MOA and is effective against the company and third parties only from its entry in the commercial register (Art. 79). The company may refuse entry only where the transfer breaches the MOA or the law.
- The MOA itself must set out how disputes between partners are settled (Art. 73).
If the SHA and the MOA conflict, the registrar applies the MOA. The partner in breach of the SHA is liable to the others in contract, but that does not by itself unwind a registered entry. Standard protection: an undertaking in the SHA that the parties will vote to amend the MOA to reflect the SHA, plus a clause that the SHA prevails between the parties.
Statutory defaults you are negotiating against
Before drafting, know what applies in a mainland LLC without any agreement:
- Pre-emption on a sale to an outsider: 30 days to buy at the agreed price; if the price is disputed, an expert nominated by the licensing authority values the shares; several takers split pro rata (Art. 80).
- General assembly: quorum of at least 50% of the capital and a simple majority of the shares represented, unless the MOA sets a higher threshold (Art. 96).
- MOA and capital changes: at least three quarters of the shares represented at the meeting; a partner's financial obligations can be increased only unanimously (Art. 101).
With a 50% quorum and simple majority, a 51% holder controls almost everything. Minority protection is a list of reserved matters with a higher threshold — and it belongs in the MOA.
The 2025 amendments: classes, drag and tag
Federal Decree-Law No. 20 of 2025 amended the Companies Law. According to the Ministry of Economy and Tourism's official explainer, it:
- allows partners' shares in an LLC to be split into different classes, making the UAE one of the first countries in the region to offer this outside joint stock companies;
- introduces drag-along and tag-along provisions — majority holders can compel minority holders to sell alongside them, and minority holders can join a sale on the same terms;
- sets out how a deceased partner's shares are handled, giving the other partners or the company a right of first refusal at a price agreed with the heirs;
- lets companies move their registration between emirates, free zones and financial free zones without liquidation.
Secondary sources report that the detail — which rights a class may carry and how classes are recorded — is left to implementing decisions. Our practice for now: we structure a preferred class in a mainland LLC only after confirming with the relevant registrar that it will accept the structure, and we build a contractual fallback into the SHA in case it will not.
Clause by clause: where each term should live
| Term | SHA | MOA |
|---|---|---|
| Transfer restrictions, ROFR / ROFO | Detailed mechanics | Core restriction |
| Drag-along / tag-along | Thresholds, price floor, process | Core right |
| Reserved matters and supermajorities | List and process | Thresholds |
| Deadlock mechanism | Full mechanism | Enough to support a forced transfer |
| Good / bad leaver, call options | Yes | Supporting transfer provision |
| Funding, business plan, information rights | Yes | No |
| Shareholder non-compete and confidentiality | Yes | No |
| Governing law and forum | Yes | Consistent dispute clause |
Deadlock. Essential in a 50/50 company: escalation, mediation, then an exit route such as a Russian roulette or Texas shoot-out, or a call option at independent valuation. Without it, a court cannot write the missing mechanism, and liquidation is often the only exit — see corporate disputes.
Shareholder non-compete. Keep it reasonable in territory, duration and activity or it becomes hard to enforce. Restrictions on employees are a different regime, governed by Article 10 of the UAE Labour Law.
Valuation. State the method (multiple, net assets, independent valuer), who appoints and pays the valuer, the timetable and whether a minority discount applies.
Governing law and forum
Corporate matters of a mainland company — transfers, the register, meetings — are governed by UAE law whatever the SHA says. For the contractual obligations between the parties there is more room:
- DIFC Courts hear civil and commercial claims where the parties agree in writing to their jurisdiction, before or after the dispute arises (Art. 5(A)(2) of Dubai Law No. 12 of 2004 as amended by Law No. 16 of 2011). English-language, common-law procedure.
- Arbitration keeps the dispute confidential; draft the clause for today's institutional landscape — see DIAC arbitration.
- Companies incorporated in DIFC or ADGM follow their own common-law company law. In DIFC the registered Articles bind the company and each shareholder as if signed by them (Art. 15, DIFC Companies Law No. 5 of 2018), so the familiar SHA-plus-Articles model works as expected — see DIFC vs ADGM.
Avoid "courts or arbitration at the claimant's option": it guarantees a fight about the clause itself. More on aligning law and forum in contracts under UAE law.
Nominee arrangements: transparency only
Side agreements where one person is on the register and another is the real owner are the riskiest kind of SHA:
- Against the company and third parties, the partner is whoever is on the register (Art. 79). A side letter contradicting it is a weak position in any dispute.
- The beneficial ownership rules (Cabinet Decision No. 109 of 2023) require disclosure of the individual who owns or controls 25% or more of shares or votes, or can appoint most directors. A nominee manager or board member must inform the company of that status within 15 days.
- For many activities a mainland company may now be wholly foreign-owned; a UAE-national stake is required only where the licensing authority or the rules on activities of strategic impact set one (Art. 10).
If a nominee structure already exists, the job is to unwind it into a transparent one: move the shares to the real owner and update the UBO register. We handle that case by case.
Frequently asked questions
Does the SHA have to be registered?
No. It is a private contract. That is exactly why anything that must bind the registrar goes into the MOA.
Can a mainland company's SHA be governed by English law?
For the parties' contractual obligations, often yes, especially paired with DIFC Courts or arbitration. Share transfers, the register and meetings remain under UAE law and the MOA.
The registrar gave us a template MOA. Is that a problem?
Check which amendments the registrar accepts and move at least the transfer restrictions and reserved matters into the MOA. Put the rest in the SHA with an undertaking to conform the MOA.
Do two friends starting a company really need an SHA?
More than anyone. A 50/50 deadlock with no exit route is one of the most common reasons companies end up liquidated.
Our legal support team drafts SHAs and the matching MOA amendments. The first consultation is free.
Sources
- Federal Decree-Law No. 32 of 2021 on Commercial Companies (Arts. 10, 14, 15, 73, 79, 80, 96, 101), Ministry of Economy text: https://www.moet.gov.ae/documents/20121/376326/Commercial+Companies.pdf/12d14f53-1a3e-47b4-8e70-fac3f672c403 — checked 24.09.2026
- Ministry of Economy and Tourism, explainer on Federal Decree-Law No. 20 of 2025: https://www.moet.gov.ae/documents/20121/0/%D8%A7%D9%84%D8%AA%D8%B7%D9%88%D8%B1+%D8%A7%D9%84%D8%AA%D8%B4%D8%B1%D9%8A%D8%B9%D9%8A+%D9%84%D9%82%D8%A7%D9%86%D9%88%D9%86+%D8%A7%D9%84%D8%B4%D8%B1%D9%83%D8%A7%D8%AA+%D8%A7%D9%84%D8%AA%D8%AC%D8%A7%D8%B1%D9%8A%D8%A9+%D9%81%D9%8A+%D8%AF%D9%88%D9%84%D8%A9+%D8%A7%D9%84%D8%A5%D9%85%D8%A7%D8%B1%D8%A7%D8%AA+(1).pdf/bcb75d77-3848-0c8d-01c3-c658a207a63e — checked 24.09.2026
- Ministry of Economy on Cabinet Decision No. 109 of 2023 (beneficial owners, nominees): https://www.moet.gov.ae/en/-/ministry-of-economy-reviews-cabinet-resolution-on-the-organization-of-real-beneficiary-procedures-and-its-role-in-supporting-the-competitiveness-of-the-business-environment — checked 24.09.2026
- DIFC Courts, Jurisdiction: https://www.difccourts.ae/about/jurisdiction — checked 24.09.2026
- DIFC Companies Law No. 5 of 2018 (Art. 15): https://www.difc.com/business/laws-and-regulations/legal-database/difc-laws/companies-law-difc-law-no-5-2018 — checked 24.09.2026
This is a general framework, not legal advice. The 2025 amendments are still being filled in by implementing rules, and registrars apply them differently. We structure each agreement for the specific company and jurisdiction.