Clarity in

Law

Insight in Practice.

At Azad & Azad Legal Consultancy, we believe that informed clients make stronger business and personal decisions.
Our insights aim to translate legal complexities into clear, actionable intelligence — grounded in UAE law and guided by global best practices.

Key Considerations in UAE Shareholders’ Agreements

A Shareholders’ Agreement (SHA) is the backbone of any company with multiple partners. In the UAE, while the Memorandum of Association (MOA) establishes a company’s structure, the SHA governs how shareholders actually work together — addressing control, profit distribution, and dispute resolution.

Why It Matters

An SHA is not legally mandatory in the UAE, but it is indispensable for maintaining harmony between founders, investors, and minority shareholders. It ensures transparency and predictability in decision-making.

Key Clauses Every SHA Should Contain

  • Capital Contributions & Ownership: Defines each shareholder’s equity and any restrictions on transfer.
  • Voting Rights & Reserved Matters: Lists decisions requiring unanimous or majority approval (e.g. mergers, loans, hiring key staff).
  • Board Composition: Specifies how directors are appointed and replaced.
  • Profit Distribution: Clarifies how dividends are declared and allocated.
  • Exit Mechanisms: Includes tag-along, drag-along, and right of first refusal clauses to protect all parties.
  • Non-Compete & Confidentiality: Prevents shareholders from engaging in competing businesses.
  • Deadlock Resolution: Establishes methods such as mediation, buy-sell options, or arbitration.
  • Governing Law: Should specify UAE law and chosen dispute resolution forum (DIAC or ADGM arbitration).

Common Mistakes to Avoid

  • Relying solely on MOA — it doesn’t address operational matters.
  • Not updating the SHA after capital increases or new partners join.
  • Overlooking regulatory changes in Mainland vs. Free Zone entities.

Takeaway: A well-drafted SHA isn’t just legal protection — it’s a blueprint for business harmony and investor confidence.

Construction Contracts & FIDIC Risk Management in the UAE

The UAE’s construction industry thrives on ambitious projects — but success depends on clear risk allocation and enforceable documentation. The FIDIC suite of contracts (particularly the Red, Yellow, and Silver Books) serves as the benchmark framework for the region.

Key Risk Areas in Construction Contracts

  • Scope & Deliverables: Ambiguity in specifications leads to variation disputes. Always include detailed drawings and performance standards.
  • Change Orders: Define how variations are approved and priced. Lack of written variation clauses is the most common cause of litigation.
  • Time Extensions & Delays: Specify allowable extensions and liquidated damages (LDs). Ensure the LD clause is enforceable and not a penalty.
  • Performance Bonds & Guarantees: Outline triggers for calling performance securities.
  • Termination & Suspension: Clarify rights to suspend works or terminate for cause/non-payment.
  • Dispute Boards & Arbitration: Establish Dispute Adjudication Boards (DABs) and arbitration forums early.

Local Legal Considerations

  • UAE Civil Code Articles 872–896 govern construction contracts (Muqawala).
  • Clauses limiting liability must be express and clear.
  • Contractors must comply with Municipality and RERA approvals where applicable.

Practical Strategies

  • Maintain a change control register during execution.
  • Align subcontract terms back-to-back with the main contract.
  • Engage early with counsel before signing FIDIC amendments.

Takeaway: A well-drafted FIDIC contract minimizes uncertainty and builds a defensible position if disputes arise — prevention is always cheaper than arbitration.

Corporate Restructuring: When & Why UAE Companies Should Realign

In today’s dynamic UAE market, corporate restructuring is no longer a reactive measure — it’s a strategic necessity for efficiency, compliance, and scalability.

When to Consider Restructuring

  • Business expansion across Free Zones or Emirates
  • Change in ownership or investor base
  • Redundant entities or overlapping licenses
  • High operating costs due to fragmented structure
  • Succession planning for family businesses

Types of Restructuring

  • Intra-group Reorganization: Transfer assets or shares to create a clear holding structure.
  • Merger or Demerger: Combine or separate entities under Ministry of Economy regulations.
  • Migration of Entity: Move from Mainland to Free Zone or vice versa for tax/regulatory benefits.
  • Liquidation or Strike-off: Closure of dormant or unprofitable entities.
  • Debt Restructuring: Reprofiling liabilities under UAE Bankruptcy Law.

Legal Process

  • Prepare board and shareholder resolutions.
  • File structural changes with DET or relevant Free Zone Authority.
  • Notify banks, lessors, and regulators.
  • Update MOA, licenses, and compliance filings.

Advantages

  • Simplified management
  • Optimized tax and licensing efficiency
  • Improved investor confidence
  • Stronger governance and control

Takeaway: Structured correctly, restructuring is not about cutting costs — it’s about future-proofing your business.

Estate Planning & Wills: Protecting Your Legacy in the UAE

Many expatriates assume their assets will automatically pass to family members — but under UAE law, that’s not always the case. Without a registered Will, the distribution of assets may default to Sharia principles, which can differ from personal intentions.

Key Steps in UAE Estate Planning

  • Inventory of Assets: Include UAE real estate, bank accounts, investments, and vehicles.
  • Choose Jurisdiction:
    • DIFC Wills Service Centre – for non-Muslims of any nationality.
    • Abu Dhabi Judicial Department (ADJD) – covers assets across all Emirates.
  • Appoint Executors & Guardians: Clearly identify who will manage your estate and care for minor children.
  • Cross-Border Assets: Coordinate with foreign lawyers to ensure consistency with international holdings.
  • Letters of Wishes: Supplement your Will with guidance on personal matters.

Advantages of a Registered Will

  • Recognized by UAE courts
  • Protects surviving family members from administrative hurdles
  • Provides clarity to banks, land departments, and regulators

Practical Tip

  • Ensure witnesses and execution formalities strictly comply with DIFC or ADJD procedures; minor errors can invalidate a Will.

    Takeaway: Estate planning is not just for the wealthy — it’s a responsible step toward protecting your loved ones and preserving your legacy.

How Legal Due Diligence Protects M&A Transactions

In every acquisition, information is power — and due diligence (DD) ensures you know exactly what you’re buying before signing.

Scope of Legal Due Diligence

  • Corporate: Verify incorporation, share capital, and governance compliance.
  • Contracts: Identify liabilities, termination risks, and change-of-control clauses.
  • Licenses & Regulatory: Ensure all approvals are valid and transferable.
  • Employment: Review compliance with UAE Labour Law.
  • Litigation: Identify ongoing or potential disputes.
  • IP & IT: Assess ownership and protection of intellectual property.

Process

  • Request and review the Data Room.
  • Prepare a Red Flag Report summarizing critical risks.
  • Align findings with financial and tax DD teams.
  • Reflect DD outcomes in SPA — warranties, indemnities, and purchase price adjustments.

Buyer’s Protection Tools

  • Representations & Warranties: Statements by seller about the company’s condition.
  • Indemnities: Seller’s promise to compensate for specific liabilities.
  • Escrow/Retention: Part of purchase price held until conditions are met.

Takeaway: A strong DD process transforms unknown risks into manageable ones — ensuring value and protection in every M&A deal.

The Evolving Role of Legal Consultants in the UAE

As the UAE’s legal landscape grows increasingly sophisticated, the role of legal consultants has evolved from document drafting to strategic partnership.

The Modern Legal Consultancy Model

  • Advisory + Strategic: Consultants now participate in business decision-making, not just compliance.
  • Technology Integration: Leveraging AI, legal automation, and document analytics for efficiency.
  • Cross-Border Coordination: Managing complex transactions involving multiple jurisdictions.
  • Preventive Lawyering: Anticipating issues before they arise through proactive structuring and policy frameworks.

Emerging Practice Areas

  • ESG and sustainability compliance
  • Economic Substance and AML monitoring
  • Data Protection and Digital Transformation Laws
  • Venture and Fintech legal structuring

Takeaway: Legal consultants are no longer just advisors — they are risk architects, helping clients build resilient and compliant enterprises for a fast-changing economy.

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Azad & Azad Legal Consultancy FZ LLE
Licensed by Fujairah Creative Free Zone
Based in Dubai, United Arab Emirates

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