UAE Law and Practice Contributed by: Ahmed Ibrahim, Malack El Masry and Maryam Quadri, IN’P IBRAHIM .N. PARTNERS
Acquisitions Exempt acquisitions
• details of the merger as well as a copy of the merger contract; • the proposed articles of the merged company; • financial statements for the two preceding financial years; • the initial approvals from the DED in the relevant emirate and from any industry-specific regulator; • an action plan and approach report for the merger; • the audited financial position of the merging com - panies (which reflects the financial position no later than three months from the date of submitting the application); • valuation from the company or their financial advis - ers; • the valuation report of the merging companies; • an auditor’s report; • the resolutions of the board of directors approving the merger; • the shareholder circular; and • special resolutions. Industry-specific regulator Initial approval is often sought from any industry-spe - cific regulators early in the negotiations, to incorporate any comments or requirements that such regulator may have, and so that when applications for final approval are made, the regulator has already agreed to the transaction in principle and provided its feed - back. DED As with the industry-specific regulator, initial approv - al is commonly sought from the DED to approve the transaction in principle. The DED will carry out the implementation of certain parts of the merger, includ - ing amending and cancelling the commercial licenc - es of the relevant merging company; amending and updating the memorandum and articles of associa - tion; de-registration of the “merging” company; and a capital increase of the “surviving” company. Market Where the publicly listed company has been granted a stay, it will only be required to disclose to the Market (as a whole) once the merger contract is signed.
All acquisitions of shares listed on the Market must be carried out on the market trading system through one of the Market’s registered brokers, unless it is an over- the-counter (OTC) acquisition or one of the exempt transactions. Some examples of exempt transactions (as applicable in the relevant Market) are as follows: • a transfer of ownership between spouses and rela - tives to the second degree; • a transfer of ownership taking place as a result of inheritance, wills or gifts made to official charitable bodies in the state without consideration; • a transfer of ownership taking place pursuant to court orders; • a transfer of ownership taking place pursuant to an amicable settlement with a financial institution; • a transfer of ownership taking place between per - sons whose names appear on one single certificate of ownership; • transfer of ownership between parent or holding companies and subsidiaries; or • the sale of securities by public auction. Acquiring less than 5% of a publicly listed company In this case, there are no specific notification or disclo - sure obligations to the CMA, DED or the Market. There are often no share transfer agreements on transac - tions of this size. Whether acquiring 5% or more of a publicly listed company or 10% or more of a par - ent, subsidiary, sister or affiliate of a publicly listed company, there are no prior notification or disclosure obligations to the CMA, DED or the Market. How - ever, the acquirer is required to provide an immedi - ate post-notification of the acquisition to the Market. This process is repeated for each additional 1% of shares in such publicly listed company purchased by the acquirer. Furthermore, the industry-specific regu - lators may have their own rules and regulations in this regard, for example, where a bank is acquiring 5% or more of shares in a publicly listed company, it will require the prior approval of the CB.
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