A 'side agreement' to the memorandum of articles and association (MoA) of a limited liability company (LLC) is considered illegal, yet it is still taken into account by the UAE's top courts.
The Supreme Courts in both Dubai and Abu Dhabi have come to recognise the side agreement, taking into account the ground realities.
90 per cent of businesses in the UAE are in reality owned by foreign partners, even if the local partner holds a 51 per cent share in the company.
In order to protect the foreign partner, the law allows up to 80 per cent distribution of the profits to the expatriate owner despite the 51:49 shareholding pattern, while according managerial control to the foreign partner.
Another measure to safeguard the real investor is right of first refusal to the foreign partner in the event that the local partner wants to transfer his shareholding.
Are you planning to Set-up your business in Dubai? Call us for Setting up new business, LLC Formation, Amendment in existing license, PRO Service and Translation. +971 55-273 2295, 055-345 7829, 04-239 1302 or mail your queries to visaprocess.ae@gmail.com
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The Supreme Courts in both Dubai and Abu Dhabi have come to recognise the side agreement, taking into account the ground realities.
90 per cent of businesses in the UAE are in reality owned by foreign partners, even if the local partner holds a 51 per cent share in the company.
In order to protect the foreign partner, the law allows up to 80 per cent distribution of the profits to the expatriate owner despite the 51:49 shareholding pattern, while according managerial control to the foreign partner.
Another measure to safeguard the real investor is right of first refusal to the foreign partner in the event that the local partner wants to transfer his shareholding.
Are you planning to Set-up your business in Dubai? Call us for Setting up new business, LLC Formation, Amendment in existing license, PRO Service and Translation. +971 55-273 2295, 055-345 7829, 04-239 1302 or mail your queries to visaprocess.ae@gmail.com
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