UAE Law and Practice Contributed by: Ahmed Ibrahim, Malack El Masry and Maryam Quadri, IN’P IBRAHIM .N. PARTNERS
• updated disclosure letter (where it has been agreed that the seller’s warranties will be repeated at clos - ing); • any required releases of security over shares in the target; • resignation letters from the directors; • the documentation required for the appointment of new directors; and • a share transfer instrument and amended memo- randum or articles of association. Where the target company is a limited liability com - pany or a private joint stock company, the implemen - tation of the share transfer will follow the UAE proce - dural requirements, regardless of the law chosen to govern the deal documentation. The SPA will contain provisions that deal with the order of events, including details of how the purchase price will move from buyer to seller, as the share transfer onshore can take up to one week to complete. The negotiating power of the parties will determine how this is done. An escrow agent will often be appointed to hold the purchase price pending the transfer of title to the shares. As with private M&A transactions, for a public M&A, there will be the usual suite of documents, including an SPA or merger contract. However, these will usu - ally have limited indemnities, representations and war - ranties compared with those considered standard in private M&A transactions. Publicly listed companies will also have disclosure requirements for their rele - vant market, along with general assembly notices and shareholder circulars to approve the transaction. The transaction agreements are usually governed by UAE law, given that publicly listed companies are subject to strict rules and regulations under UAE law. To avoid contradiction and ambiguity in the legal interpretation of the contracts, UAE law is the prudent choice. 6. Structuring 6.1 Length of Process for Acquisition/Sale The process of acquiring/selling a business is usually mandated by the commercial side of the transaction. Some transactions close in a few months or even less,
while others can take up to a year or more to close, depending also on the size of the target. Private Acquisition From a procedural perspective, for a private acquisi - tion, closing will require notarisation and regulatory approvals that would generally take no more than a few weeks to one month, depending on the industry. The UAE has been very efficient in moving towards electronic submissions that require some handling at this stage, but which will in the long run make trans - fers more efficient and less time-consuming. Public Acquisition From a public acquisition perspective, closing that does not involve a mandatory tender offer should not take more than a few weeks to one month (taking into consideration negotiations, due diligence and other non-regulatory matters), as with private acquisitions. However, in the case of an MTO process, closing An MTO is triggered where an acquirer acquires, or where an acquisition results in such acquirer hold - ing, 30% plus one share or more of a publicly listed company. The acquirer is obliged to immediately stop increasing its ownership ratio and notify the CMA of its ownership ratio and whether there is any intention to make an MTO; if not, the acquirer’s ownership ratio must be reduced to 30% or less within three months of notification to the CMA. 6.3 Consideration In the majority of transactions, the consideration is cash, which can be paid in a variety of ways, such as: • a lump-sum payment at completion; • by instalments post completion; and • with parts of the consideration deferred or retained for payment at a later date. would take no less than three months. 6.2 Mandatory Offer Threshold Share swaps are also very common in the UAE. No pricing practice is customary, and this mainly depends on the structure of the transaction. There has also been a noticeable increase in the use of the locked- box approach to consideration, particularly where a private equity player is selling or buying. However,
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