Buying a Business in Dubai: Share Deal or Asset Deal, and How the Transfer Works
When you "buy a business" in Dubai you are really choosing between two transactions. In a share deal you buy the shares of the company that runs the business, and you inherit everything the company is: its licence, staff, contracts, bank history and any tax or legal exposure. In an asset deal your own company buys the equipment, contracts, brand and goodwill, and you take on only what the contract lists. Most expensive mistakes we see come from treating the first as if it were the second.
What you inherit: the FTA's own summary
The Federal Tax Authority puts the distinction plainly in its public clarification on business transfers. In a share sale the company itself is not a party; it keeps all its assets, liabilities, licences, employees and relationships, and the new owner takes it over with all of its liabilities, including any existing tax obligations. In an asset sale title passes in specific assets, and the buyer does not take on liabilities that are not expressly part of the deal.
| Question | Share deal | Asset deal |
|---|---|---|
| Speed to operate | Fast: licence, visas, bank account and contracts stay in place | Slower: you need your own licence, lease, account and visas |
| Historic liabilities | Stay with the company, which is now yours | Generally stay with the seller |
| Employees | Same employer; accrued entitlements continue | New employment with your entity |
| Contracts | Continue unless they contain a change-of-control clause | Must be assigned, usually with counterparty consent |
| VAT | A share sale is not a transfer of a going concern | Transfer of a whole business, or an independent part of it, to a taxable person who continues it is not a supply (Art. 7(2) VAT Decree-Law); a plain sale of assets is taxable |
| Diligence effort | Deep | Narrower, focused on title to the assets |
Due diligence: the red-flag checklist
Treat each item as a question the seller must answer in writing:
- Trade licence. Valid? Which activities? Who is the licensed manager? Unpaid renewal fines move with the company.
- Memorandum of Association (MOA). Does the register match what the seller says? Are there transfer restrictions or pre-emption clauses?
- UBO register. Under Cabinet Decision No. 109 of 2023 a beneficial owner is the individual who ultimately owns or controls 25% or more of the shares or votes, or can appoint or remove most of the directors. A mismatch between the register and reality is a pre-signing issue.
- Tax. Corporate tax and VAT registrations, returns filed, penalties outstanding. If the pitch is "free zone, zero tax", check whether Qualifying Free Zone Person status is actually claimed and met. A QFZP has no AED 375,000 zero-rate band: non-qualifying taxable income is taxed at 9% from the first dirham, and a breach costs the status for the current period and the following four. See our piece on QFZP status.
- Tax losses. Planning to use them? Article 39 of the Corporate Tax Law limits carry-forward after a change of more than 50% in ownership; whether the company continues the same or a similar business becomes the key question.
- Employees. Contracts, WPS salary records, accrued end-of-service benefits. In a share deal the whole accrued amount stays with the company; how it is calculated is covered in our gratuity guide.
- Lease and Ejari. Whose name, term, break clauses. A mainland licence is not renewed without a registered address.
- Debt and key contracts. Loans, guarantees, supplier arrears, change-of-control clauses.
- Litigation and enforcement. Claims against the company and its manager.
- Bank accounts. Signatories, blocks, open compliance queries.
Whatever the review finds should end up in the sale agreement as a price adjustment, a warranty or indemnity from the seller, or a retention of part of the price. A due diligence report that is not tied to contractual protection is money spent on reading.
Transferring shares in a mainland LLC
Federal Decree-Law No. 32 of 2021 on Commercial Companies sets the sequence:
- Other partners' pre-emption right (Art. 80). A partner selling to an outsider notifies the other partners, through the manager, of the buyer and the terms. Each partner has 30 days from notification of the agreed price to buy the shares instead. If the price is disputed, an expert nominated by the licensing authority values the shares at the cost of the partner seeking pre-emption. Several takers split the shares pro rata. After 30 days with no exercise, the seller is free to sell.
- Official authenticated document (Art. 79). The assignment is made in line with the MOA under an officially authenticated instrument; in practice this means notarisation of the transfer and the MOA amendment.
- MOA amendment. The MOA and every amendment are drawn up in Arabic, and where there is a second language, the Arabic text governs in the UAE (Art. 14). An MOA amendment needs partners holding at least three quarters of the shares represented at the meeting (Art. 101).
- Registration with Dubai's Department of Economy and Tourism (DET) or the relevant emirate's authority. The transfer is not effective against the company or third parties until it is entered in the commercial register (Art. 79), and the company may refuse entry only if the transfer breaches the MOA or the law. Changes to registered particulars must be notified within 15 working days (Art. 15).
The practical conclusion: pay against registration, not against signature. Escrow or a staged payment tied to the new commercial register extract protects both sides.
Free zones: the zone's rules apply
The Commercial Companies Law does not apply to free zone companies where the zone's own laws contain special provisions (Art. 5), so each zone runs its own process. DMCC is a good example of what to expect: a transfer is available only with an active licence and no sanctions on the company account; the file includes a share transfer form and articles signed electronically, a board resolution where applicable, the incoming shareholder's passport, KYC form and proof of address, and third-party NOCs where relevant. We obtain the target zone's current checklist before the SPA is signed, so the closing conditions match what the zone will actually accept.
DIFC and ADGM: common-law companies
The financial centres have their own company law. Under DIFC Companies Law No. 5 of 2018, a company registers a share transfer on delivery of a written instrument of transfer, updates its register of shareholders and files a notice with the Registrar; if it refuses to register, it must give reasons within 14 days. ADGM has its own Companies Regulations 2020. When these jurisdictions are worth the cost is covered in DIFC vs ADGM.
Tax on the deal: only what is confirmed
- VAT: a share sale is not a transfer of a going concern; a genuine business transfer to a taxable person who continues it is outside VAT; an ordinary asset sale is taxable at 5%.
- Corporate tax for a corporate seller: a gain on shares may be exempt under the participation exemption in Article 23, which requires, among other conditions, holding at least 5% for at least 12 months. Whether every condition is met under the current wording is checked before signing.
- The target's tax history stays with the target in a share deal — the FTA says so expressly.
For individual sellers and foreign buyers the answer also depends on their home-country tax residence, which needs to be coordinated with an adviser there.
After closing
- Visas: the outgoing partner's visa is cancelled; the buyer applies for their own through the company. See UAE residence visa.
- Bank: a new shareholder triggers fresh KYC and sometimes a pause on transactions. Change signatories on the same day as the register.
- UBO and EmaraTax: update both.
- Change-of-control clauses: notify counterparties or collect consents.
Frequently asked questions
Do the other partners have to approve my purchase of a stake?
Not as such, but in a mainland LLC they have a statutory 30-day pre-emption right on a sale to an outsider. The company may also refuse to register a transfer that breaches the MOA or the law, and an unregistered transfer does not make you a partner.
Can we sign the share purchase agreement abroad?
You can sign the commercial agreement anywhere, but a mainland transfer still needs an officially authenticated instrument and registration. Foreign documents go through consular legalisation and Arabic translation.
Share deal or asset deal for a small café or agency?
If the company has a long history, staff and tax registrations, often an asset deal, or a share deal with strong warranties and a retention. If the value is the licence and contracts, a share deal. Decide after diligence, not before.
Do I need a shareholders' agreement if I buy only part of a company?
Yes, if other shareholders remain. Exit, deadlock and valuation should be agreed now; see our guide to the shareholders' agreement.
We run acquisitions from diligence to registration through our legal support team. The first consultation is free.
Sources
- Federal Decree-Law No. 32 of 2021 on Commercial Companies (Arts. 5, 14, 15, 79, 80, 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
- FTA, VAT Public Clarification VATP015, Transfer of a Business as a Going Concern: https://tax.gov.ae/en/content/transfer.of.a.business.as.a.going.concern.aspx — checked 24.09.2026
- Federal Decree-Law No. 47 of 2022 on Corporate Tax (Arts. 23, 39), Ministry of Finance PDF: https://mof.gov.ae/wp-content/uploads/2022/12/Federal-Decree-Law-No.-47-of-2022-EN.pdf — checked 24.09.2026
- Ministry of Economy on Cabinet Decision No. 109 of 2023 (beneficial owners): 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
- DMCC, Share Transfer Guidelines: https://dmcc.ae/members/support/knowledge-bank/share-transfer-guidelines — checked 24.09.2026
- DIFC Companies Law No. 5 of 2018 (Art. 46): 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. Share transfer procedures differ between emirates and free zones and change over time, and the tax outcome depends on each party's status. We review each transaction on its documents.