Choosing between a share purchase and an asset purchase is one of the first structural decisions in a UAE acquisition. The choice determines what the buyer acquires, which liabilities remain exposed, how contracts and employees are treated, and which tax, regulatory and registration requirements apply.

A share purchase usually provides greater business continuity because the buyer acquires the company that already owns the assets, employs the workforce and holds the contracts and licences. An asset purchase allows the buyer to select the business assets and operations it wants, but those assets may need to be transferred individually.

Neither structure is automatically more favourable. The correct approach depends on the target’s jurisdiction, legal form, licensed activities, contracts, workforce, liabilities and tax position.

In brief

A share purchase may be appropriate where the buyer wants to acquire the complete operating business and preserve its contracts, workforce, licences and commercial history.

An asset purchase may be preferable where the buyer wants only selected assets or a particular division and does not wish to acquire the seller’s legal entity.

However, an asset purchase does not necessarily isolate the buyer from every historic liability. UAE rules governing transfers of business assets, employees, contracts, taxes and regulated activities may cause certain obligations to follow the transferred business.

Option A: Share Purchase

What is acquired?

In a share purchase, the buyer acquires shares or ownership interests in the target company. The target remains the same legal person and continues to own its assets, employ its workforce and bear its liabilities.

Contracts, leases and licences do not need to be transferred separately because they remain with the target. However, the transaction may still trigger change-of-control provisions, lender consent requirements, ownership restrictions or regulatory approvals.

When is a share purchase commonly used?

A share purchase may be suitable where:

• the buyer intends to acquire the entire business;
• important contracts or licences cannot easily be transferred;
• maintaining operational continuity is commercially important;
• the company has a substantial workforce; or
• transferring each asset separately would be impractical.

The buyer must nevertheless assess whether the target’s constitutional documents, licence conditions or sector regulations restrict changes in ownership or control.

Historic liabilities

The target remains responsible for its existing liabilities after completion. The buyer therefore acquires indirect exposure to the company’s historic tax, employment, contractual, regulatory and litigation risks.

Due diligence is essential. Warranties, indemnities, escrow arrangements and purchase-price adjustments may allocate financial risk between the parties, but they do not remove the underlying liability from the target company.

Share-transfer formalities

For a UAE mainland limited liability company, a partner’s interest must be transferred through a formally executed and duly attested instrument. The transfer becomes effective against the company and third parties only after it is recorded in the commercial register.

Where an interest is transferred to a non-partner, the other partners may also have a statutory 30-day right to redeem the interest, subject to the Commercial Companies Law and the company’s memorandum of association.

Different procedures apply to joint-stock companies, free-zone entities, DIFC companies and ADGM companies. The relevant registrar’s requirements should therefore be confirmed before signing.

Common SPA protections

A share purchase agreement commonly addresses:

• title to the shares;
• authority to enter into the transaction;
• financial statements and undisclosed liabilities;
• tax matters;
• material contracts;
• employees;
• licences and regulatory compliance;
• intellectual property;
• litigation;
• specific indemnities for known risks; and
• post-completion claims procedures.

Escrow, holdback and retention arrangements may also be used, but there is no general UAE statutory percentage or duration. The amount and period should reflect the risks identified during due diligence.

Option B: Asset Purchase

What is acquired?

In an asset purchase, the buyer acquires specified assets, rights or business operations from the seller rather than acquiring the seller itself.

The agreement should clearly identify:

• transferred and excluded assets;
• assumed and retained liabilities;
• transferred contracts;
• employees;
• intellectual property;
• licences;
• inventory;
• receivables; and
• records and data.

A distinction must be made between a sale of individual assets and a transfer of “business assets” under the UAE Commercial Transactions Law.

Transfer of business assets

Federal Decree-Law No. 50 of 2022 contains specific rules for transfers of business assets. These may include tangible and intangible property used in a commercial business, such as equipment, inventory, trade names, goodwill, customer relationships, lease rights and intellectual property.

Where the statutory regime applies:

• the transfer must be documented in an attested or notarised instrument;
• it must be recorded in the commercial register;
• publication and creditor procedures may apply;
• rights and obligations connected with the business may pass to the buyer; and
• the buyer may become liable for qualifying business debts.

An APA cannot therefore guarantee that every liability excluded between the parties will remain unenforceable against the buyer.

Contracts

Contracts do not automatically transfer merely because they are listed in the APA. Assignment, novation or counterparty consent may be required.

The parties should review:

• restrictions on assignment;
• consent requirements;
• termination rights;
• change-of-control provisions;
• deposits and advance payments; and
• accrued claims.

A statutory transfer of business assets may also affect the rights of contractual counterparties.

Employees

It is incorrect to assume that employees must always be terminated and rehired in an asset transaction.

Article 48 of Federal Decree-Law No. 33 of 2021 provides that employment contracts remain effective where there is a change in the form or legal status of the establishment. The new employer becomes responsible for those contracts from the date on which the establishment’s data is amended.

Where Article 48 does not apply, employee consent, termination, new employment contracts, work-permit amendments and settlement of accrued entitlements may be required.

DIFC and ADGM employees must be considered under their separate employment regimes.

Licences and permits

Commercial and regulatory licences are issued to a specific legal person and generally cannot be treated as ordinary transferable assets.

The buyer may need:

• a new trade licence;
• additional activities;
• premises approval;
• professional qualifications;
• sector-specific consent; or
• immigration and establishment registrations.

The parties should confirm the relevant authority’s requirements before assuming that the seller’s licences can continue after completion.

Intellectual property

Transfer formalities depend on the type of intellectual property.

Assignments of registered trademarks, patents and industrial designs generally require recordal with the relevant authority. Copyright, software, domain names, databases, know-how and confidential information require separate contractual treatment.

VAT treatment

The VAT treatment of an asset purchase depends on what is transferred.

A transfer of a whole business, or an independent part of a business, to a taxable person that will continue that business may qualify as a transfer of a going concern. Where the statutory conditions are satisfied, the transaction is not considered a supply for VAT purposes.

If those conditions are not met, the VAT treatment must be determined separately for each asset. It is incorrect to assume that every transferred asset will automatically be subject to VAT at 5%.

Share Purchase vs Asset Purchase in the UAE: Comparison

Corporate Tax Considerations

Share purchase

The target remains the same taxable person. Its historic tax exposures and tax attributes remain with it.

Tax losses may remain available, but their use is subject to the Corporate Tax Law, including the general 75% utilisation limit and conditions that may apply following a change in ownership.

A seller’s gain on the disposal of shares may be taxable or may qualify for an exemption, including the participation exemption, where the statutory conditions are satisfied.

Asset purchase

The seller may recognise accounting gains or losses on the transferred assets, subject to Corporate Tax adjustments.

The buyer may recognise acquired assets at values determined under the applicable accounting standards and purchase-price allocation. UAE Corporate Tax does not provide a universal statutory tax-basis step-up. Any future depreciation, amortisation or deduction must be assessed according to the nature of the asset and the applicable accounting and tax rules.

Merger Control

Both share and asset transactions may constitute an economic concentration where they result in direct or indirect control over all or part of an undertaking.

The current notification thresholds under Cabinet Resolution No. 3 of 2025 are met where either:

• the parties’ combined annual sales in the relevant UAE market exceed AED 300 million; or
• their combined share of the relevant UAE market exceeds 40%.

A qualifying transaction must be notified at least 90 days before completion and must not be completed while the review is pending.

Cabinet Resolution No. 59 of 2026 contains the new Executive Regulations of the Competition Law. As at the date of this article, it has been issued but will enter into force on 30 July 2026.

Merger-control analysis should therefore begin before signing because the filing obligation and standstill period can materially affect the transaction timetable.

Regulatory Approvals

Transactions involving regulated entities may require prior approval or notification.

The relevant authority may include:

• the Central Bank of the UAE;
• a securities regulator;
• a telecommunications, health or education authority;
• an emirate-level licensing authority;
• a free-zone authority; or
• another sector-specific regulator.

The legal consequence of completing without approval depends on the applicable law and licence conditions. It may involve refusal to register the transaction, administrative penalties or action against the licence, but should not be described as automatically voiding every acquisition.

Which Structure Is Right for the Deal?

A share purchase may be preferable where:

• the buyer wants the complete operating business;
• contractual and licence continuity is essential;
• employees should remain with the same employer;
• transferring individual assets would be difficult; or
• the target’s historic risks can be addressed through due diligence and contractual protection.

An asset purchase may be preferable where:

• only part of the business is being acquired;
• the seller carries unrelated operations;
• the buyer wants to exclude certain assets or contractual liabilities;
• the target contains material historic risk;
• the business can be separated operationally; or
• contracts, employees and licences can be transferred or replaced.

The structure should not be selected solely on the assumption that an asset purchase eliminates liabilities. The parties must also compare operational continuity, tax treatment, transfer formalities, regulatory approvals, merger control and implementation costs.

Conclusion

The correct choice in a share purchase vs asset purchase in the United Arab Emirates depends on the business being acquired and the legal steps required to implement the transaction.

A share purchase generally offers greater continuity but exposes the buyer to the target’s existing liabilities and tax history. An asset purchase allows the buyer to define the acquisition perimeter, but contracts, employees, licences and registered assets may require separate transfer procedures, and certain liabilities may follow the business by law.

The parties should complete corporate, tax, employment, VAT, regulatory and merger-control analysis before the transaction structure is fixed.

Sources

1. Federal Decree-Law No. (32) of 2021 on Commercial Companies
2. Federal Decree-Law No. (50) of 2022 Promulgating the Commercial Transactions Law
3. Federal Decree-Law No. (33) of 2021 Concerning the Regulation of Labour Relations
4. Federal Decree-Law No. (47) of 2022 on the Taxation of Corporations and Businesses
5. Federal Decree-Law No. (8) of 2017 on Value Added Tax, as amended
6. Cabinet Decision No. (52) of 2017 on the Executive Regulation of the Federal Decree-Law on Value Added Tax, as amended
7. Federal Decree-Law No. (36) of 2023 Regulating Competition
8. Cabinet Resolution No. (3) of 2025 Concerning the Ratios and Regulatory Controls Related to the Application of the Competition Law
9. Cabinet Resolution No. (59) of 2026 Concerning the Executive Regulations of Federal Decree-Law No. (36) of 2023 Regulating Competition
10. Cabinet Resolution No. (109) of 2023 Regulating the Real Beneficiary Procedures
11. Federal Decree-Law No. (36) of 2021 on Trademarks
12. DIFC Law No. 2 of 2019 — Employment Law
13. ADGM Employment Affairs Office — Employment Regulations