Adding or Removing a Partner from a Dubai Company

Changing the ownership structure of a Dubai company is not completed by a private agreement between the parties. Under United Arab Emirates law a share transfer is a sequenced administrative process that combines an amendment to the Memorandum of Association (MOA), notarisation and registration in the commercial register. Adding a partner and removing a partner rely on exactly the same legal instrument: a share transfer.

The sections below set out the legal basis, the step-by-step procedure, the required documents, the official fees and the post-transfer filing duties that apply to Dubai mainland (DET) and free zone companies.

What Adding or Removing a Partner Actually Means

Bringing a new shareholder into a Dubai limited liability company and letting an existing one exit are two directions of the same transaction: the transfer of membership interests from one holder to another.

• Adding a partner: an existing shareholder assigns part of their interest to the incoming party, or the capital is increased and new shares are issued to them.
• Removing a partner: the departing shareholder assigns their interest to the remaining shareholders or to a third party; alternatively the company acquires the shares.

Both routes require the MOA to be amended and the shareholder list on the trade licence to be updated. If the company has not been incorporated yet, the LLC company formation in Dubai guide is the right starting point.

Process at a Glance

The UAE Law Governing Share Transfers

Federal Decree-Law No. 32 of 2021 and the Articles That Matter

The Commercial Companies Law was issued on 20 September 2021 and came into force on 2 January 2022. Three provisions drive a shareholder change:

• Article 14(1): the MOA and every amendment to it must be made in Arabic and authenticated by the competent authority, failing which it is deemed null and void. Notarisation is therefore not an optional formality.
• Article 79(1): a partner may assign or mortgage their membership interest, but the assignment is only enforceable against the company and third parties from the date it is entered in the commercial register. A signed agreement on its own does not complete the transfer.
• Article 80: the other partners may request to redeem the interest on the same terms within 30 days of the date the manager is notified.

What Federal Decree-Law No. 20 of 2025 Changed

The amendment issued on 1 October 2025 and effective from 14 October 2025 changes how share transfer documents are drafted:

• LLCs and joint stock companies may now create multiple classes of shares, so an incoming shareholder can receive interests differentiated by voting or profit rights.
• A company's registration may be transferred between emirates, and between a free zone and the mainland, while preserving legal personality.
• Drag-along and tag-along rights now have a statutory basis. Writing them into the MOA when a partner joins makes a later exit far simpler.

Full Foreign Ownership and Restricted Activities

Following Federal Decree-Law No. 26 of 2020, foreign investors may hold full ownership of mainland companies, and more than a thousand activities in Dubai fall within that scope. Additional conditions still apply to the activities of strategic impact defined by Cabinet Resolution No. 55 of 2021 — security and defence, banks, exchange houses and finance companies, insurance, currency printing, telecommunications, Hajj and Umrah services, Quran centres, and fish-trap related services. Outside those areas, the nationality of an incoming shareholder is not a constraint.

Mainland (DET) vs Free Zone

To compare the two structures before deciding, see mainland Dubai or a free zone and the overview of Dubai free zones.

How to Add a Shareholder to a Dubai LLC

Step 1: Review the MOA and Serve the Pre-emption Notice

Start by checking whether the current MOA restricts transfers. The law gives the remaining partners a 30-day window to buy the interest first, and a transfer completed without that notice carries a later challenge risk. Single-shareholder companies skip this step.

Step 2: DET Initial Approval and Licence Amendment Request

The Dubai Department of Economy and Tourism "amend a trade licence" service expressly covers adding and removing a partner. Activity codes, the incoming shareholder's nationality and any sector approvals are checked at this point.

Step 3: Share Sale Agreement and MOA Annex

The detailed sale and purchase agreement between the parties and the short-form annex submitted to the notary are two separate documents. The annex is drawn up in Arabic and records the consideration, the new shareholding split and any change of manager.

Step 4: Signature Before the Notary Public

The parties sign the MOA annex before a Notary Public. Where a party cannot attend in the UAE, a properly executed and fully legalised power of attorney allows representation.

Step 5: Pay the Fees and Collect the Amended Trade Licence

The authenticated documents go back to DET, the fees are settled and a trade licence showing the new shareholder list is issued. The transfer becomes enforceable against third parties only once it is registered.

How to Remove a Partner from a Dubai Company

Exit by Transfer or Acquisition of the Shares by the Company

In most cases the departing shareholder assigns their interest to the remaining shareholders. Reducing the capital or having the company acquire the shares is possible but takes longer, because it triggers additional approvals and creditor-protection steps.

When a Partner Refuses to Sign

UAE law does not allow a shareholding to be cancelled unilaterally. The dispute-resolution and valuation clauses in the MOA govern, and the drag-along mechanism recognised by the 2025 amendment can force a sale where it has been agreed in advance. Failing that, the competent court decides.

The Departing Shareholder's Investor Visa

Residence held through partner or investor status is processed through the company's immigration file. The guide on how to obtain a Dubai investor visa explains the thresholds involved.

Documents Required for a Share Transfer

Free Zone Shareholder Change and Fees

In the free zones the process runs through the authority's own portal and the fees differ by zone. DMCC publishes the clearest official schedule:

Under the Meydan Free Zone regulations a transfer takes effect on the date the register of shareholders is updated; the board updates it within two business days and the Authority is notified within ten business days. IFZA and Meydan do not publish a share transfer fee schedule, so the current amount should be confirmed with the authority before filing.

Share Transfer Cost and Official Fees

On the mainland the cost is driven by the value-based annex fee. According to the DET published schedule:

Government charges therefore stay in the low thousands of dirhams for modest transfers, and remain predictable on larger ones because the 0.5% rate is capped at AED 15,000. Translation, attestation, legal advice and PRO service fees sit on top and vary with scope. Market fees and Chamber of Commerce dues belong to the annual licence renewal, not to the transfer, and including them inflates the budget misleadingly.

How Long Does It Take?

• Mainland, individual shareholders only: a matter of a few working days once the file is complete.
• Foreign corporate buyer: driven by the apostille and attestation chain, which is usually the longest stage.
• Free zone: set by the authority's internal procedure; the Meydan regulations require the register to be updated within two business days.
• Establishment card amendment: stated as 48 hours in the GDRFA service description.

Tax Consequences of a Shareholder Change

UAE Corporate Tax

Corporate tax applies at 0% on taxable income up to AED 375,000 and 9% above that threshold. Where the seller is a company, the gain falls within the corporate tax net, and the participation exemption may be available if the conditions are met. Our corporate tax in Dubai guide covers the rules in detail.

Free Zone Status and Small Business Relief

A Qualifying Free Zone Person continues to benefit from the 0% rate on qualifying income, so any effect of the ownership change on that status should be assessed before signing. Small Business Relief applies below AED 3 million in revenue and was extended in August 2026 to tax periods ending on or before 31 December 2029.

Individuals, VAT and Multinational Groups

The UAE levies no separate capital gains tax or personal income tax on individuals, and personal investment income is not treated as a business activity. VAT is charged at 5%, with a mandatory registration threshold of AED 375,000 and a voluntary threshold of AED 187,500. UAE members of multinational groups with global revenue of EUR 750 million or more fall within the Domestic Minimum Top-up Tax regime for financial years beginning on or after 1 January 2025. Sellers who are tax resident elsewhere should also review controlled foreign company rules and the applicable double tax treaty; our Dubai tax consultancy team can assess this.

Filings People Forget After the Transfer

• UBO register: under Cabinet Decision No. 109 of 2023 any change to beneficial owner data must be filed with the Registrar within 15 days.
• Tax records: shareholder details in the corporate tax and VAT registrations are updated with the Federal Tax Authority.
• Immigration file: the GDRFA establishment card amendment service expressly covers the assignment or cancellation of a partner.
• Banking: the CBUAE AML/CFT Rulebook treats a material change in the ownership or legal structure of a legal person as a trigger for an event-driven customer due diligence review. Account mandates and signatories are revised accordingly — see opening a corporate bank account in Dubai.
• ESR: under Cabinet Decision No. 98 of 2024 the economic substance regime no longer applies to financial years ending after 31 December 2022, while obligations for 2019 to 2022 remain live.

Mistakes That Delay the Process

• Skipping the pre-emption notice or not observing the 30-day period.
• Preparing the MOA annex in a language other than Arabic, or omitting notarisation.
• Leaving the apostille, MOFA attestation and legal translation chain incomplete for foreign documents.
• Leaving the consideration undefined in the agreement, when the fee calculation depends directly on it.
• Drafting a power of attorney too narrowly for the notary to accept.
• Postponing the UBO, tax, immigration card and bank updates after completion.

A shareholder change is also the right moment to revisit the legal form, activity codes and licence structure. For the mainland option, see company formation in Dubai mainland.

References

• UAE Commercial Companies Law, Federal Decree-Law No. 32 of 2021 — uaelegislation.gov.ae
• Ministry of Economy and Tourism, amendments under Federal Decree-Law No. 20 of 2025 — moet.gov.ae
• Dubai Department of Economy and Tourism, trade licence amendment service and fees — dubaidet.gov.ae
• GDRFA Dubai, establishment card amendment service — gdrfad.gov.ae
• DMCC Schedule of Charges — dmcc.ae
• Cabinet Decision No. 109 of 2023 on beneficial owner procedures — moet.gov.ae
• UAE Ministry of Finance, corporate tax and VAT — mof.gov.ae
• Federal Tax Authority, taxation of natural persons — tax.gov.ae
• CBUAE AML/CFT Rulebook, reviewing and updating customer due diligence — rulebook.centralbank.ae

This content is general information and does not replace legal or tax advice. Fees and procedures are updated by the authorities from time to time, so confirm current figures from the official source before filing.