UAE Law and Practice Contributed by: Duncan Pickering, Nicola de Sylva and Sean Cope, DLA Piper Middle East LLP
3.4 Taxes or Fees Relating to the Granting and Enforcement of Security There are no specific taxes that would apply in the UAE; however, the following fees are payable in relation to granting and enforcing security over real estate: • a bank property valuation fee; • notarial fees; • a mortgage registration fee; • notarial fees to give notice of default (Dubai); • a publication fee and a public auction fee if a secured asset is sold by public auction; and • court fees for enforcement of a security inter - est. 3.5 Legal Requirements Before an Entity Can Give Valid Security It is not possible for a joint stock company (JSC) target, or any of its subsidiaries, to provide any financial aid (such as loans, security and guar - antees) that will assist a buyer in acquiring its shares. However, limited liability companies are exempt from such restrictions under a Ministerial Resolution of 2016. In any event, as a matter of good practice, all companies would be advised to demonstrate that there is a corporate benefit to the company granting any security. 3.6 Formalities When a Borrower Is in Default A lender is entitled to satisfy the debt from the mortgaged property when the debt falls due, provided that the mortgage has been properly registered. Upon a default in payment by the borrower, and provided that the mortgage has been registered, the lender must give 30 days’ notice to the debt - or by registered mail (Abu Dhabi) or through a notary public (Dubai) before commencing exe - cution proceedings. If the payment is not made
on which entities can own real estate, and the process for share pledges can differ depending on where a company is registered. Generally, if the SPC is incorporated in onshore UAE or in certain free zones, the share pledge would be subject to notarisation and can only be grant - ed to locally licensed banks. For cross-border financing, a foreign lender would be required to appoint a locally licensed bank that will act as a local security agent. Guarantees Guarantees are common in the UAE, including corporate and/or personal guarantees given in relation to a real estate financing. These kinds of guarantees are specifically codified in the Civil Code and the UAE Commercial Code. 3.3 Restrictions on Granting Security Over Real Estate to Foreign Lenders The UAE Central Bank’s rules and regulations provide that a party wishing to hold security over real estate must be a bank, company or finan - cial institution that is licensed by the UAE Cen - tral Bank to provide property finance. Foreign (unlicensed) lenders will often appoint a locally licensed security agent to act on their behalf in relation to security over real estate assets. The only restrictions on repayments being made to a foreign lender under a security document or loan agreement include: • restrictions or measures designed to counter - act money laundering and/or the funding of terrorist activities; and • transactions involving certain sanctioned countries or blacklisted entities. The UAE Central Bank may impose additional restrictions.
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