We are often approached for UAE law advice by foreign companies looking to acquire UAE entities. The first service that such clients generally require is a due diligence review of the UAE target.
Aside from reviewing key contracts with suppliers and customers, lease agreements, finance facilities and other information that is to be provided by the target, the foreign client, or the client’s foreign counsel, invariably asks us to independently verify or determine from publicly available sources the following core matters: (a) whether the target is duly registered, validly existing and in good standing; (b) whether the target is in liquidation, receivership or insolvency proceedings; (c) the ownership structure of the target; (d) ownership of key assets of the target and whether there are any liens, mortgages, encumbrances or other security interests over the shares or assets of the target that are located in the UAE; (e) the target’s freehold or leasehold rights over its real property; (f) whether there are any pending litigation claims against the target in the UAE; and (g) any key permits and licences.
Clients are often surprised (and sometimes distressed) to hear that it is not possible to obtain most of this basic information with respect to limited liability companies (LLCs) incorporated outside of the dozens of free zones in the UAE, where the public information obtainable varies.
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Ziyad Hadi is a counsel at Afridi & Angell, a UAE-based law firm. Afridi & Angell has offices in Abu Dhabi, Dubai and Sharjah.
Emirates Towers Offices – Level 35
Sheikh Zayed Road, Dubai
P.O. Box 9371
United Arab Emirates
Tel: +971 4 330 3900
Fax: +971 4 330 3800