Mergers and acquisitions (M&A) in the UAE have become increasingly dynamic, driven by sector consolidation and landmark regulatory updates. Following the enactment of Federal Decree-Law No. 20 of 2025, the legal landscape for “mergers and acquisitions UAE” has shifted toward greater flexibility, aligning mainland practices with international standards to attract global private equity and venture capital.

Key Legal Frameworks in 2025

The UAE’s M&A environment is governed by federal laws, emirate-level decrees, and specialized free zone regulations:

• Federal Commercial Companies Law (2025 Amendments): This is the primary legislation for mainland companies. Key updates now allow for multiple share classes and statutory drag-along and tag-along rights, simplifying exit strategies for investors.
• Competition Law (Federal Decree-Law No. 36 of 2023): Effective from March 2025, new merger control thresholds require mandatory pre-notification to the Ministry of Economy if combined turnover or market share limits are met.
• Free Zone Regulations (DIFC & ADGM): These jurisdictions operate under common-law frameworks, providing sophisticated platforms for holding companies and cross-border restructuring.

Common M&A Structures

Transactions in the UAE typically follow one of three legal paths:

1. Share Purchase: The buyer acquires the target company’s shares. This is now more efficient under the 2025 law, which permits the re-domiciliation of companies across Emirates and free zones without dissolving the legal entity.
2. Asset Purchase: The buyer acquires specific business assets. This remains a popular route to avoid inheriting unknown liabilities.
3. Merger (Absorption or Consolidation): Two entities combine. The 2025 framework clarifies the process for in-kind contributions and valuation requirements by accredited valuers.

Mandatory Due Diligence Areas

Thorough due diligence is vital, especially with 2025’s stricter compliance landscape:

• Regulatory & Competition: Verify if the deal meets the AED 300 million turnover or 40% market share threshold for mandatory filing.
• UBO and AML: Ensure Ultimate Beneficial Owner (UBO) records are up-to-date, as penalties for inaccuracies have significantly increased.
• Tax Compliance: Assess potential liabilities under the 9% UAE Corporate Tax and Pillar Two requirements for multinational groups.
• Employment: Review contracts for 2025 labor law compliance, particularly fixed-term mandates and gratuity provisions.

The 2025 M&A Transaction Timeline

Deals in 2025 require careful timing due to new regulatory review periods:

• Pre-Notification: Ministry of Economy reviews can take 90 days (plus an optional 45-day extension).
• Re-domiciliation: If moving an entity between jurisdictions as part of a deal, allow time for dual-registry approvals.
• Execution: Digital signatures are now widely recognized, accelerating the “signing” phase across global teams.

Sector Trends in 2025

M&A activity is currently concentrated in high-growth sectors:

• Technology & AI: Driven by state-backed funds and sovereign wealth investment in data infrastructure.
• Renewable Energy: Cross-border acquisitions supporting the UAE’s “Net Zero 2050” strategic initiative.
• Healthcare: Continued consolidation of regional clinics and hospitals into large-scale medical groups.

Frequently Asked Questions (FAQ)

1. When is a merger notification mandatory in 2025?

Notification is mandatory if the total annual sales of the parties in the UAE exceed AED 300 million or if their combined market share exceeds 40%.

2. Can a foreign company merge with a UAE mainland company?

Yes, provided they comply with foreign ownership rules and obtain the necessary approvals from the Ministry of Economy and sector regulators.

3. What are “Drag-Along” and “Tag-Along” rights under the new law?

Drag-along allows majority owners to force a sale of the whole company, while Tag-along protects minorities by letting them join a sale on the same terms. The 2025 law now officially recognizes these in mainland LLCs.

4. Does the 9% Corporate Tax apply to M&A deals?

Yes. However, the law provides for group relief and restructuring relief, allowing for the transfer of assets or shares without immediate tax impact under specific ownership conditions.

5. How long does the Ministry of Economy take to approve a deal?

The standard review period is 90 days from the date the application is deemed complete, though it can be extended if additional information is required.