A subscription issues **new** shares and the money goes to the company. A purchase transfers **existing** shares and the money goes to the seller. In the UAE the difference is procedural as well as commercial: on the mainland a transfer requires **notarisation, authority approval and a licence amendment**, and it is not effective until those are done.
Share Purchase Agreement
Buying existing shares
A subscription issues new shares and the money goes to the company. A purchase transfers existing shares and the money goes to the seller. In the UAE the difference is procedural as well as commercial: on the mainland a transfer requires notarisation, authority approval and a licence amendment, and it is not effective until those are done.
| Item | Detail |
|---|---|
| Company | [COMPANY NAME], [licence] [NUMBER] |
| Entity type | [Mainland LLC / Free zone / DIFC / ADGM] |
| Seller | [NAME], [Emirates ID / passport / licence] [NUMBER] |
| Buyer | [NAME], [DETAIL] |
| Shares sold | [NUMBER], being [PERCENTAGE] |
| Total consideration | [CURRENCY] [AMOUNT] |
| Type | [Secondary sale / acquisition of the whole company] |
| Completion | [DATE] |
| Notarisation required? | [Y — mainland / N] |
| Warranty cap | [The consideration received by the Seller] |
| Language | [English / Bilingual — Arabic prevails onshore] |
1. Sale and Purchase
1.1The Seller shall sell and the Buyer shall purchase [NUMBER] shares (the "Sale Shares") free from all encumbrances, with all rights attaching from Completion.
1.2The consideration is [CURRENCY] [AMOUNT], payable [in full at Completion / as set out in Clause 4].
1.3The Seller waives any pre-emption right it holds over the Sale Shares and shall procure the waiver or exercise of any held by others.
2. Conditions
2.1Completion is conditional on:
(a)pre-emption rights under the constitutional documents and any shareholders’ agreement having been complied with, waived or exhausted;
(b)approval of the transfer by the managers or board;
(c)any consent required under a shareholders’ agreement;
(d)the Buyer executing a deed of adherence;
(e)[completion of due diligence to the Buyer’s satisfaction];
(f)confirmation that the Buyer is eligible to hold the shares given the licensed activity;
(g)[any regulatory or sector approval]; and
(h)no material adverse change since [DATE].
3. Completion
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These notes accompany the template and explain the drafting choices, the compliance points and the mistakes most often made with this document. They appear as a final page in the Word file, intended to be deleted before the document is executed.
A subscription issues new shares with the money going to the company; a purchase transfers existing shares with the money going to the seller. The warranty positions differ and so do the mechanics. Using the wrong document creates real problems at completion.
It takes effect on notarisation of the amended constitutional document and approval by the authority, followed by a licence amendment. A buyer who has paid and signed but not completed those steps is not yet a shareholder. Build weeks into the timetable.
A seller or buyer who cannot attend the notary must be represented under a power of attorney notarised abroad, legalised through the UAE embassy and attested by the Ministry of Foreign Affairs. Three to six weeks, and it must start before anything else.
Where the constitution or a shareholders’ agreement gives existing holders a right of first refusal, a transfer completed without offering it can be void or refused registration. It is the step most often skipped in a friendly sale between people who know each other.
Constitutional documents frequently give a discretion to decline. A buyer who has paid without securing approval may find itself unable to be recorded as a shareholder. Deal with it as a condition, not an assumption.
Where the company carries a strategic-impact activity or a regulated licence, introducing a new shareholder can raise ownership or approval questions that did not arise at incorporation. Confirm before agreeing the transfer, not at the counter.
Business warranties from someone who no longer manages the company are difficult to justify and impossible for them to verify. Buyers wanting business warranties should look to continuing management, not to an exiting minority holder.
Each seller should be liable only for its own warranties, capped at its own consideration. Joint liability lets a buyer pursue one seller for the whole claim and leave them to chase the others. This is the most important limitation for any selling shareholder.
A departing shareholder with an undocumented loan account, unpaid salary or an informal equity promise is a claim waiting to surface after the buyer has paid. Clause 6.1 and Schedule 3 make it explicit.
Where the seller was also an employee, gratuity, leave and final salary are due within 14 days of the last working day and are separate from the share consideration. Two processes, two timelines, both easy to conflate in a negotiated exit.
Resigning an office does not remove a bank mandate, a system login, a name from the licence or a live power of attorney. Departed shareholders retaining authority is among the most common findings in later diligence.
A metric the buyer controls, with no restriction on acting to depress it, is an invitation to dispute. Define the computation, give the seller audit rights, and restrict restructuring that would defeat it.
A buyer crossing the significant-interest threshold becomes a registrable controller with filing obligations, and the seller may cease to be one. Both changes need recording and filing on the change.
The UAE does not generally tax capital gains. Where shares are held or dealt with as part of a trade, the gain may be treated as income. The distinction turns on the facts and both parties should take their own advice.
Reflects UAE law and practice current as of {{DATE OF USE}}. Notarisation and approval requirements, licence amendment procedures, UBO obligations, ownership restrictions for particular activities and the tax treatment of share disposals all change — take UAE legal and tax advice before any material secondary sale.
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.