Nevertheless, one of the most pointed out issue being considered in M&A are questions in regard to restrictions on share transfer. Under Federal Law No. 2 of 2015, shareholders of limited liability companies (LLCs) are given a leeway to invoke statutory pre-emption rights for share transfers – rights granted cannot be waived, unless otherwise approved and agreed upon by all shareholders at the time of transfer. On the contrary, private joint stock companies (JSCs) and shareholders of free zone entities do not enjoy the same statutory pre-emption rights on transfer of shares. However, shareholders in free zone companies can agree and reduce these restrictions in the company’s articles, memorandum of association or shareholder’s agreement. In addition, transfer of share in free zone companies requires approval from the relevant free zone authority.
In passing, most common way of acquiring private owned company is through share purchase or asset purchase. It can also be done through statutory merger which is usually not commonly resorted to. Main advantage of share purchase could be the target company remain as it is, and the process of transferring shares is generally straightforward.
In M&A, another commonly asked question pertains to the duration of the process and how much time it takes to effectuate private M&A transaction – to larger extent, this depend on the parties. As an overview, the administrative procedure may require notarization of transfer agreement, registration of amendments to the articles of association with competent authorities, in which case both actions can be handled at rather short period. Not unless, the process requires legalising documents issued by foreign authorities.
Negotiating and executing the transaction agreement will likely be the central part of the M&A transaction. Hence, we have listed the main and relevant documentation needed:
M&A process entails very extensive process that requires input from specialist legal experts. The office of Al Reyami & Muhyealdeen offers our expertise in all aspects of M&A practice from preparation and negotiation process, including legal advice on end deal structures and assistance in conducting legal due diligence down to the merger filings with the relevant authorities and the implementation of pre-closing restructuring.