Five things surface in almost every UAE diligence and none of them are the financials: **licence and activity mismatch, work permit and visa gaps, WPS and Emiratisation records, an out-of-date UBO register, and unassigned founder intellectual property**. Run those first — they tell you whether the deal has a problem before anyone has spent heavily.
Due Diligence
Checklist for a UAE company
Five things surface in almost every UAE diligence and none of them are the financials: licence and activity mismatch, work permit and visa gaps, WPS and Emiratisation records, an out-of-date UBO register, and unassigned founder intellectual property. Run those first — they tell you whether the deal has a problem before anyone has spent heavily.
| Item | Detail |
|---|---|
| Target | [COMPANY NAME], licence [NUMBER] |
| Jurisdiction | [Mainland / Free zone — name it / DIFC / ADGM] |
| Group entities | [LIST WITH JURISDICTIONS] |
| Transaction | [Investment / Acquisition / Secondary] |
| Reviewer | [NAME] |
| Cut-off date | [DATE] |
| Red flags identified | [NUMBER] |
| Status | [In progress / Complete] |
The Five That Matter Most
| # | Area | What goes wrong | How to test it |
|---|---|---|---|
| 1 | Licence and activity | The company does things its trade licence does not cover, or operates from premises not approved for the use | Read the activity list against what the business actually does and where. Check the tenancy and its registration |
| 2 | Work permits and visas | Staff working on the wrong permit, on a spouse or visit visa, or in roles that do not match their permit | Sample the employee list against permits and job titles. Ask about anyone paid but not on the establishment file |
| 3 | WPS and Emiratisation | Salaries paid differ from those registered; quota shortfalls accruing monthly; in the worst case, fictitious Emirati hires | Reconcile WPS submissions to registered salaries. Recalculate the Emiratisation rate on skilled headcount |
| 4 | UBO register | Established at incorporation and never updated through transfers and investments | Compare the register and central filing to the actual current ownership chain |
| 5 | Founder and contractor IP | Pre-incorporation code and contractor work never assigned | Ask for executed assignments. Absence is the norm, not the exception |
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Licence and activity mismatch, permit and visa gaps, WPS and Emiratisation records, a stale UBO register, and unassigned founder IP account for most of what UAE diligence actually finds. Testing these in the first week tells you whether the deal has a problem before significant cost is incurred.
A UAE company may only carry on the activities on its licence, from premises approved for that use. A mismatch is not a technicality — it can invalidate contracts, block visa applications and attract penalties, and it is surprisingly common in businesses that have evolved since incorporation.
The two most revealing questions are whether anyone is being paid who is not on the establishment file, and whether anyone holds a permit for a role they do not perform. Both indicate informal arrangements that transfer to the buyer.
Compare submissions against salaries registered with MOHRE. Underpayments, missing employees and gaps in submission are all visible without asking the target anything, and they quantify directly into an indemnity.
Penalties accrue monthly per unfilled position without any complaint being filed. Compute the rate on skilled headcount rather than accepting the target’s figure, and ask specifically about any arrangement that produced an Emirati hire without genuine employment — collusion penalties run to AED 1,000,000 per fictitious hire and carry criminal exposure.
Gratuity accrues at 21 days per year for five years and 30 thereafter, on basic salary only. Under-provisioning is common where finance has used a simplified assumption, and the shortfall is a real liability the buyer inherits.
Funded end-of-service schemes require actual monthly contributions. A target that kept accruing a gratuity provision after moving into DIFC has arrears that must be paid, not a provision that can be settled at exit. Test the contribution history, not the balance sheet line.
Established at incorporation and never revisited through transfers, investments and restructurings. Compare it to the actual current ownership chain, remembering the beneficial owner is always a natural person however many layers sit between.
Code, designs and brand created before incorporation, or by contractors engaged without an assignment clause, belong to those individuals. Where the core product was built that way and a founder has since left badly, it may be very difficult to fix.
Founders frequently register the brand and domains personally before incorporation and never transfer them. Easy to fix, easy to miss, and it becomes leverage if that founder is departing.
A registered agency gives the agent statutory exclusivity, constrained termination and compensation rights that a contract cannot displace, and the agent can block parallel imports. A target locked into one may be far less attractive than it appears, and this belongs in the first week of diligence.
Cheques issued for rent, supply or finance and not yet presented are a live liability that does not appear in the accounts as such. Ask for a schedule and confirm which remain outstanding.
A power granted years ago for one transaction, with copies at a bank and a government office, remains effective against a third party without notice of revocation. Ask what has been granted and what has been revoked.
Federal PDPL, DIFC or ADGM depends on where each entity is established, and a group can be running two regimes at once. Intra-group data flows between a DIFC entity and a mainland affiliate are restricted transfers requiring safeguards.
Reflects UAE requirements current as of {{DATE OF USE}}. Licensing, permit, WPS, Emiratisation, tax, UBO and data protection requirements all change and differ by emirate and free zone — have legal and tax diligence conducted by advisers for any material transaction, and use this list to scope rather than replace that work.
This is a ready-to-use template provided for convenience. Laws and requirements change, and every situation is different — please have it reviewed by a qualified professional (a lawyer, corporate secretary, or accountant as relevant) before you rely on it.