Answered plainly
A UAE company files almost nothing you can read, so buying into one is an evidence problem long before it is a valuation problem
The investment case is written about things you can walk around, and a share is not one of them. The material that brings foreign money to Dubai is written about assets. A tower with a floor plate and a rent roll.
The investment case is written about things you can walk around, and a share is not one of them
The material that brings foreign money to Dubai is written about assets. A tower with a floor plate and a rent roll. A plot with a title. A hotel with an occupancy figure. Whatever else can be said about those, they can be inspected, and the questions a buyer asks about them are the ordinary questions — who owns it, what is it earning, what is charged on it.
Buying into an operating company is a different exercise, and the difference is not scale. It is that almost nothing about a UAE company is filed anywhere a stranger can read it. There is no public accounts filing here. There is no public shareholder list. There is no public record of claims. An investor arriving with the habits of a jurisdiction where a company's last three sets of accounts can be downloaded for a few pounds will find that the equivalent search returns a licence number and a list of activities.
That is not a reason to avoid the transaction. It changes the method. What is public is thin and free; what is filed is real but sits with the authority and the seller; and what is neither is recoverable from documents the business could not have avoided creating. The last category is where the diligence actually happens, and the useful property of those documents is that a seller who wants to present a flattering picture does not think of them first.
What it gives youWhat it withholds
- What is publicWhether the licence exists and is current, who issued it, the legal form, the activitiesOwnership, revenue and claims — it says nothing about any of the three
- What is filedOwnership, and the beneficial ownership record required federallyNeither is open to the public, so a stranger cannot read either of them
- What could not be avoidedThe tenancy, the labour file, the tax filings and the bank statementsIt reaches you only when the seller chooses to hand it over
Three things are public, they cost nothing, and they take ten minutes
A national economic record run federally lets anyone look up a licence: whether it exists, whether it is current, which authority issued it, the legal form, and the activities it carries. That is the whole of the free tier and it should be the first ten minutes of any conversation.
It answers more than it appears to. A licence in a different legal form from the one described, an activity list that does not include the thing the business says it does, a licence issued by a zone when the pitch describes a mainland operation, or a status that is not current — each of those is a discrepancy worth resolving before anything else is discussed. It will not tell you who owns the company. Ownership is filed with the licensing authority and with the beneficial ownership record required federally, and neither is open to the public — a point we set out in full on a free zone hides your ownership from your competitors and from nobody else.
The ladder is the whole method. Ask downward, not upward: request the bottom two rungs early, and treat everything above them as commentary until they arrive. It is worth knowing what the other side of that request feels like, because several of the items are documents a UAE company has to go and obtain from an authority, an auditor, a landlord or a foreign ministry rather than print: the documents a UAE company has to ask somebody else for is the same list read from the seller's desk, and a slow answer is not always an evasive one.
The documents the business could not avoid creating
Premises. A commercial tenancy in Dubai is Ejari-recorded and a utility account has a meter behind it. Together they establish that there is somewhere the business is, how long it has been there, and what it costs — and they will not match a story about scale that is not true. Our page on the address on your licence explains why that document exists at all.
People. A UAE employer holds a file with the labour ministry, pays through a monitored wage system, and carries an end-of-service entitlement that accrues with each employee's service and is not required to be funded. That last point is the one buyers miss: the liability is real, it is usually not on the management accounts in any visible form, and it transfers with the company rather than with the seller. Hiring the first person opens a file the licence did not sets out the obligations that create it.
Tax. Since the corporate tax regime commenced, an operating company has a filing history, and a filing history is evidence. Corporate tax runs at 9% on taxable income above AED 375,000 and 0% at or below; a free zone company claiming the 0% rate holds a status it has to qualify for under federal instruments, and whether it actually qualifies is a diligence question rather than a fact about its address. Above a revenue threshold, and for qualifying free zone persons, audited financial statements are required — so for a target of any size, "we do not have audited accounts" is itself the finding.
taxable income
AED 375,000taxable income
VAT. A business above the enrolment threshold charges 5% and files. The number it quotes on its invoices can be checked against the Federal Tax Authority's own facility, and the filings show turnover from a direction the seller does not control.
What the free lookup will not tell you, and what buyers assume it does
Three assumptions attach to that ten-minute search and all three are wrong.
That a current licence means a solvent company. It means the fee was paid. Renewal is a payment, not an examination of the accounts.
That the activity list describes the business. It describes what the company is permitted to do. A company frequently carries activities it has never used and lacks one it has been invoicing for, and the second of those is a finding rather than a detail — an invoice raised outside the licensed activity is a problem the buyer inherits.
That a free zone company's 0% tax status is confirmed by anything on the licence. It is not. That status is a federal test the company either meets or does not, and the only evidence is the filings.
The liabilities that travel with the shares rather than with the seller
Buying shares means buying the company as it stands, with its history. Four items recur and none of them is visible in a set of management accounts.
Accrued end-of-service entitlements, as above, sized by headcount and length of service.
Tax exposure for periods already closed. A company that has taken a filing position which turns out to be wrong carries the consequence forward. This is the single strongest argument for asking for filed returns rather than management figures.
Distribution and agency arrangements. An arrangement recorded with the Ministry of Economy and Tourism can survive a change of ownership on the principal's side and can be very difficult to unwind, which is the subject of your UAE distributor can stop your own goods at the border.
Guarantees. Facilities extended to a young UAE company are commonly supported by a personal guarantee from the current shareholder, and the guarantee does not follow him out of the door in the way both parties assume. A new UAE company has nothing a lender can hold explains why those guarantees exist in the first place.
There is one more, and it is structural rather than financial: what happens to the shares if a shareholder dies before completion, or if a minority holder later dies. The mechanics are set out on when a shareholder dies the company keeps existing and stops being able to act, and they belong in the constitutional document rather than in the sale agreement.
Litigation is the search you cannot run, so run the proxies
There is no public record of onshore civil claims to search. The DIFC Courts publish judgments, so a target with any DIFC connection is worth searching there, but for most companies the honest answer is that a claims search is unavailable and something else has to stand in its place.
The proxies are ordinary. Ask for the bank's facility letters and any correspondence about arrears. Ask whether any labour complaint has been filed. Ask for the licence renewal history and whether any fine is outstanding — an authority that is owed money says so at renewal. Ask the landlord. And put a warranty in the agreement covering claims, because in the absence of a search the warranty is doing the work the search would have done.
The closing is an authority approval, not a signature
The step that surprises buyers most is the last one. Shares in a UAE company do not move because two people signed a share purchase agreement. A mainland company's shares move by a notarised amendment to the constitutional document, with the economic department's approval. A free zone company's shares move when the zone authority approves the transfer under its own regulations, which differ zone by zone and can include conditions nobody read at the outset.
Two consequences follow. Completion is a process with a third party in it, so the agreement needs a gap between signature and completion and a clear allocation of who bears what during it. And the seller has to remain co-operative through that gap, which is an argument for holding back part of the consideration rather than for trusting the timetable.
the gap between signature and completion
- Sign the share purchase agreementNothing has moved yet: shares do not transfer on a signature
- Lodge the transfer with the authorityMainland, a notarised amendment with the economic department's approval
- Hold the gap between signature and completionThe agreement has to allocate who bears what during it
- Will the seller stay co-operative while a third party works through the approval
- Hold back part of the considerationThe seller keeps a reason to see the approval through
- Trust the timetableCompletion still sits with a third party and nothing is held back
- The approval is the closing, not the signatureA free zone transfer turns on the zone authority's own regulations, zone by zone
Buying part of a company is the harder version, because you cannot compel anything afterwards
Taking a minority stake in a UAE company is a different transaction from taking the whole of one, and the difference is not the price. A minority holder has whatever rights the constitutional document gives them and, in practice, very little else. There is no public filing to monitor, no statutory obligation on the company to circulate accounts to a stranger, and no realistic route to force a distribution.
Everything a minority investor will ever want therefore has to be written into the document before the money moves: an information right with a stated frequency, a reserved-matters list, a pre-emption right on new shares, and an exit mechanism with a defined trigger. Our page on structuring a UAE company that investors can fund sets out what that document has to carry from the company's side, and the same list read from the investor's side is the diligence agenda.
The blunt version: in a jurisdiction with no public filing, minority protection is contractual or it does not exist.
Where buying into an existing company is the wrong route
Where the value is one person. If the revenue is a founder's relationships, you are buying a licence and a lease at a premium. Hire the person instead.
Where the target's licence does not cover what you intend to do. An activity change is an amendment with its own approval, and where a second authority is involved it is a fresh application. Forming the right company is often cheaper than correcting the wrong one, which is the calculation on what actually goes wrong in a UAE company formation.
Where the attraction is a bank account that already exists. Banks re-run their checks on a change of ownership. The account is not an asset you can buy.
Where the seller will not produce the bottom two rungs of the ladder. That is the finding, and it is a complete one.
what each route actually gets you
| Judged on | Buying into this company | Forming a new one |
|---|---|---|
| Existing customers and a trading record | Yes | No |
| A filing history that can be inspected | Yes | No |
| A licence that already carries the activity you intend | Partial | Yes |
| Staff already in place, with their accrued service | Yes | No |
| Faster than the other route | No | Yes |
| Nothing carried forward from periods already closed | No | Yes |
What we would want in front of us before you sign anything
The licence, the constitutional documents as currently amended, the tenancy, the last two filed tax returns, twelve months of bank statements, the labour file summary and the list of any guarantees the outgoing shareholder has given. That is a week of work for a seller who has been running the business properly and an impossible request for one who has not, which is exactly why it is the right first ask. Send us the licence number and we can tell you within a day whether the public record matches the pitch.
Frequently asked questions
Can I see a UAE company's accounts before I buy?
Only if the company gives them to you. There is no public filing of accounts here, so the seller decides what you see and in what order. For a target above the revenue threshold, and for a free zone company claiming the 0% rate, audited financial statements are required to exist — so "we do not have audited accounts" is not a gap in your diligence, it is the finding. Ask for the filed tax returns and the bank statements in the same breath, because those have third parties on both sides.
How do I check a company is real?
Through the federal licence lookup, which is free and takes about ten minutes. It confirms whether the licence exists, whether it is current, which authority issued it, the legal form and the activities it carries. It tells you nothing about ownership, revenue or claims. A current licence means the fee was paid rather than that the company is solvent, and renewal is a payment rather than an examination of the accounts.
Is it faster to buy a company than to form one?
Rarely, once the approvals and the diligence are counted. A share transfer is approved by the licensing authority rather than completed by signature, the bank re-runs its own checks on a change of ownership, and an activity the licence does not carry is an amendment on top of all of it. Speed is not the reason to buy an operating business; existing customers and a trading record are.
Do I inherit the employees?
Yes, because you are buying the company rather than its assets. It keeps its own labour file, its own staff and their accrued service, and changing the shareholder resets none of it. The item buyers miss is the end-of-service entitlement, which accrues with each employee's service, is not required to be funded, is usually invisible in management accounts, and travels with the company rather than with the seller.
Begin with a clear conversation
Tell us what you intend to build.
A consultant will map the structure, jurisdiction, approvals and likely cost against what you actually described — not against a package.
