Mergers & Acquisitions activity in the UAE has been witnessing a surge in the post-pandemic era as the region is maturing into an active hub for cross-border transactions, with inbound as well as outbound M&A flows. Contemporaneously, the UAE legal and regulatory landscape governing M & A has been evolving rapidly in recent times to attract more foreign investment. As a result, it is imperative to seek bespoke and expert legal advice and assistance to navigate the complexities of Mergers & Acquisitions transactions in the UAE.
Mergers & Acquisitions Inbound Flows into the UAE
Legal Due Diligence for Foreign Investors
As a first step, a foreign investor looking to invest in a UAE business (whether onshore or a free zone) (“UAE Target”) must engage an adept UAE legal team to conduct a thorough legal due diligence exercise on the UAE Target. Such an exercise and a legal due diligence report will help the foreign investor identify potential risks and liabilities from the standpoint of applicable UAE laws and regulations, prior to proceeding with the intended investment into the UAE Target.
Regulatory Considerations for Fintech Investments
In the context of fintech for example, it is worth knowing that the Central Bank of the UAE (“CBUAE”) has been updating its regulations and regulatory requirements on a regular basis, and therefore, investors looking to invest in the onshore UAE fintech space must ensure that the concerned UAE Target has procured the requisite permits from the CBUAE for doing the business activities as stated on its commercial license.
Understanding the UAE’s Dual Legal Systems
One of the complexities of M&A in the UAE arises from the country’s dual legal frameworks:
- Mainland (Onshore): Governed by the civil law system.
- Financial Free Zones (DIFC & ADGM): Follow the common law system, similar to England & Wales and India.
Key Commercial Laws in the UAE Mainland
- Federal Commercial Companies Law
- Federal Civil Transactions Law (UAE Civil Code)
- UAE Commercial Transactions Code
- UAE Labour Code
- Federal Trademark Law
- UAE Corporate Tax Law
Mergers & Acquisitions Outbound Flows from the UAE
Cross-Border M&A Transactions
For UAE-based investors looking to invest in the other GCC countries or any other jurisdictions across the globe, it would still be wise to engage a competent UAE-based team of commercial attorneys who could effectively liaise with the relevant transactional attorneys of the target entity’s jurisdiction to help navigate the laws and regulations applicable to a cross-border Mergers & Acquisitions deal.
Investment into Saudi Arabia (KSA) Case Study
For instance, if a UAE-based investor is envisaging a potential investment into an entity incorporated in the Kingdom of Saudi Arabia (KSA), our Firm’s attorneys can assist with effectively liaising with our affiliate KSA attorneys to conduct a thorough legal due diligence on the KSA target and thereafter draw up the relevant definitive agreements to seal the deal between the relevant parties in consonance with applicable laws and regulations.
Conclusion:
Navigating the complexities of a cross-border M&A transaction can be quite arduous. However, with end-to-end expert legal advice and assistance, the closing of a deal in an efficient manner can be smooth sailing.
At James Berry & Associates, we possess substantial legal expertise to advise and assist with cross-border M&A and other commercial matters. For further advice in relation to your M&A requirements, please click here to contact our Corporate and Commercial department.
Managing Partner