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What Factors Are Vital for Ensuring ESR Report Compliance upon Submission
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What Factors Are Vital for Ensuring ESR Report Compliance upon Submission?

This is to inform you that the Economic Substance Regulation (ESR) requires reporting by December 31, 2023, for the Financial Year ending December 31, 2022.

The Economic Substance Regulations (ESR) in the United Arab Emirates (UAE) require certain legal entities in domestic and free zones to conduct one or more of nine relevant activities (RA) (referred to as “licensees”) to comply with annual filing obligations.

Licensees earning income and meeting under the exempted licensee criteria (for instance, if a licensee operates as a branch of a foreign entity and its income is taxed in a foreign jurisdiction) must submit a notification but are exempt from filing a report.

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There are other exemptions. The Ministry of Finance has recently released updated instructions in Ministerial Decision No. 100 of 2020, which can help firms determine whether they conduct a relevant activity and are exempted licensees.

Key Factors to Consider

Relevant Activities (RA): As per the UAE Ministry of Finance’s ESR Regulation, the responsibility for submitting an ESR Notification and ESR Report lies with Licensees involved in any pertinent activities and generating specified relevant income outlined in the regulation.

Reminder about the Deadline: The deadline to submit the ESR Report is approaching. We strongly encourage you to act promptly, to guarantee compliance with the regulatory obligations.

An entity must submit a notification within six months from the end of the fiscal year (FY) stating its engagement in RA, regardless of whether the licensee is exempt from the ESR or generates income from RA.

A report outlining specific business details should be filed within 12 months after the conclusion of the Fiscal Year, solely if income was derived during the period from RA and the licensee was not exempt from the ESR.

Consequences of Non-Compliance: Not submitting the ESR report by the specified deadline may lead to an administrative penalty of AED 50,000. It’s essential to adhere to the resolution’s provisions by submitting the report and any pertinent information or documentation to avoid these penalties. Furthermore, failure to comply with the Economic Substance regime for the year ending 31 December 2022 will have severe results, such as suspension or cancellation of your business license.

Suggested Steps for Your Business

ESR Evaluation: We advise all Licensees to undertake a thorough ESR assessment, irrespective of involvement in pertinent activities, and, if applicable, to submit an ESR notification and report via the MoF portal.

Accountability for Pertinent Activities: Licensees involved in relevant activities and generating relevant income are obligated to file the ESR Notification and ESR Report. They will be answerable to their respective regulatory authorities.

Key ESR Factors to Consider before the end of the Financial Year

All legal entities should address the following ESR matters and act, where applicable, before the end of the fiscal year:
  • The entity needs to evaluate if it engaged in and earned income from any of the nine RAs within the period. This assessment is crucial as it determines the entity's specific ESR compliance needs for the fiscal year
  • Entities that have generated income from RA during the fiscal year should assess their adherence to the relevant ESR evaluations, namely the directed and managed test, core revenue generating activities (CIGA) test, and adequate examination
  • After the review, entities should promptly undertake all essential measures before the fiscal year's conclusion to rectify any potential non-compliant areas (i.e., ensuring adherence to all relevant ESR tests)
  • Regarding the CIGA test, entities must showcase control and supervision over any outsourced arrangements during the fiscal year. This can be illustrated, for instance, through contractual agreements or correspondence
  • Given the FTA ESR audits, Licensees should gather pertinent supporting documents regarding their ESR compliance obligations and maintain them on file. Should they be chosen for an audit, Licensees have a brief timeframe of 5 working days to furnish the FTA with all requested documentation (i.e., demonstrating compliance with the ESR tests)
The guidance mentioned above (not exhaustive) is to offer entities a chance to initiate any required actions for ESR compliance before it becomes too late.
How Can IMC Be Your Trusted Ally?

Navigating the complexities of compliance with regulatory bodies such as the Federal Tax Authority (FTA) and the Ministry of Finance (MOF) can be challenging. At IMC, we understand the importance of staying in good standing with these authorities. That’s why we’re here to assist you in conducting a thorough ESR assessment and ensuring clear communication of your status to the regulatory authority.

By partnering with us and addressing these requirements promptly, you can avoid the stress of potential conflicts and significant penalties. Remember, we’re just a call or an email away for any additional guidance or questions you might have. Let’s tackle these challenges together, with ease and confidence.

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7 Compelling Advantages of Establishing a UAE Foundation
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7 Compelling Advantages of Establishing a UAE Foundation

In the dynamic business environment in the United Arab Emirates, foundations have emerged as a powerful tool for safeguarding wealth and ensuring seamless succession planning. Foundations were introduced in 2017 in the UAE and have gained prominence quickly. Currently, they find their place in three of the free zones in the UAE, including RAKICC, ADGM, and DIFC.

A foundation in the UAE is an independent legal entity allowing individuals to consolidate their wealth while keeping their personal assets distinct from their business interests. This separation takes place by endowing assets to the foundation, which holds them in its name. During your company formation in Dubai, you may decide to establish a foundation and take advantage of its benefits.

A foundation is free from shareholders and works as an ‘orphan’ entity. These foundations are managed according to their charter and help beneficiaries, who often belong to the same family. This striking feature of foundations makes them suitable for succession planning.

Advantages of Establishing a Foundation in the UAE

Establishing a foundation in the UAE offers several potential benefits to organizations. These include:

1. Protecting Assets

Establishing a foundation enhances the protection of your assets. When the assets are transferred to a foundation, they no longer belong to the founder. This makes them less vulnerable to government claims, creditors, or disputes within the family. So, under specific conditions, these assets wouldn’t be readily accessible to external parties. This ensures the security and preservation of your wealth.

2. Privacy

Since foundation beneficiaries remain confidential, they ensure discreet family wealth management. It reduces the potential for claims or judicial actions from third parties trying to exploit the wealth of the founder. This significantly secures the financial interests of the family.

A confidential foundation structure enhances the bargaining power of the founder in business acquisitions and negotiations. It mitigates the risk of the founder or heirs being targeted by individuals with malicious motives to access their wealth.

3. Flexibility

UAE foundations are flexible, which provides internationally mobile families with a strategic advantage when they have their assets scattered across multiple jurisdictions. When the beneficial and legal ownerships are separated, families can adapt their wealth management strategies to changing goals. Thanks to this adaptability, their inter-generational legacy planning and wealth protection remain effective regardless of the global financial conditions or changing family conditions.

4. Effective Succession Planning

When it comes to succession planning, foundations prove to be highly effective tools. Founders get peace of mind, knowing that the asset distribution or their benefits will comply with what they wished, not considering succession laws. Traditional wills become effective only upon death. However, foundations protect a family’s assets in different scenarios like bankruptcy, incapacitation, divorce, or incapacitation. Foundations can also expedite asset transfers and mitigate complexities associated with probate procedures.

5. Better Family Governance

Foundations offer an effective corporate governance framework to manage a company or single-family office. With this professional structure, the founders with their family members can systematically manage their wealth. This ensures optimal protection of assets and their distribution. The powerful governance framework ensures that family assets are managed professionally, benefitting both the founder and the subsequent generations.

6. Philanthropic Opportunities

Foundations in the UAE also provide philanthropic opportunities. Founders have the scope to align their foundations with humanitarian and ethical values. This enables them to support causes and initiatives holding personal significance.

This is an ongoing support and can involve making regular donations to charitable organizations, education, medical research, etc. Therefore, the legacy of the founder extends beyond preserving wealth and contributes to the society.

7. Legacy in Perpetuity

The goals and vision of the founder continue in perpetuity with a UAE foundation. This is long-term commitment ensures the proper impact of the founder on their community, family, or chosen causes.

The IMC is a trusted and experienced business setup consultant in Dubai, providing expert guidance to entrepreneurs and corporations establishing a new company in the UAE’s thriving economy. Our dedicated team offers customized solutions to ensure that your venture in Dubai is set up with professionalism and a deep understanding of the local market. Let us help you establish your business with precision and expertise.

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UAE: Understanding Qualifying Free Zone Person Status
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UAE: Understanding Qualifying Free Zone Person Status

The IMC focuses on the criteria for attaining Qualifying Free Zone Person status in various jurisdictions in the context of global business and corporate tax regulations.

Under the global corporate tax guidelines, Qualifying Free Zone Persons can benefit from a preferential 9% corporate tax rate on their Qualifying Income. However, they need to fulfil the following conditions:

  • Establishing a substantial presence within the designated free zone
  • Generating Qualifying Income
  • Adhering to the Transfer Pricing documentation and Arm’s Length Principle
  • Ensuring that non-qualifying revenues remain below specified de-minimis thresholds
  • Compiling audited Financial Statements as per local laws
  • Fulfilling any additional conditions that the relevant authorities need
It is imperative to fulfil all these conditions right from the outset. Non-compliance with one or more of these conditions may deprive you of your tax benefits. The implications apply for the current financial year along with the upcoming four years, even if you meet all the conditions afterwards.

Key Insights

With the calendar year drawing to a close in 2023, businesses operating within free zones, with their initial tax periods commencing on or after January 1, 2024, should prioritize evaluating their operations to be eligible for the preferential corporate tax regime (i.e., a 9% corporate tax rate) as applicable.

It is imperative to carry out strategic planning and an early assessment to ensure that businesses meet all the conditions from the very beginning. It takes time to implement any restructuring, resource allocation, adjust processes, or evaluate potential benefits.

Certain steps may be more urgent or important compared to others to ensure compliance from the first day. Taking timely action after identifying those steps holds the key to enjoying the 9% benefit.

Disclaimer

Our team of corporate tax experts at the IMC Group is dedicated to navigating the complex world of global tax regulations. We provide comprehensive support throughout your compliance journey. You can contact one of our tax specialists by click here or reach out to us via email at [email protected]. We are always here to help you.

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Empowering Family Businesses in the UAE: The New Family Business Law
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Empowering Family Businesses in the UAE: The New Family Business Law

Family businesses have long been the driving force behind the thriving economy in the UAE. It significantly contributes to the growth and prosperity of the country. These businesses could operate without a comprehensive legal framework for governing their operations until recently. However, with the introduction of UAE Federal Decree Law No.37 in 2022, circumstances are different for family businesses.

Also known as the New Family Business Law, this is a groundbreaking legislation that marks a crucial moment for family-owned enterprises. It offers a wide range of provisions to strengthen family businesses in the country.

Facilitating Succession Planning

One of the primary objectives of the New Family Business Law is to support succession planning. Although this is a crucial aspect, family-owned companies tend to overlook the priority. Do you know that less than 15% of family businesses manage to survive into a third generation?

To address this issue, the new law facilitates smoother transitions of businesses between two subsequent generations. As a result, you can expect a more seamless ownership transfer for family businesses and control. It ensures that your family business can continue in the years to come. Forward-thinking enterprises are seeking professional assistance for succession planning for Dubai family offices from established companies.

Exception to Statutory Pre-emption Rules

The New Family Business Law introduces an exception to certain statutory pre-emption rules. This empowers family businesses with greater flexibility to manage their ownership structures. Due to this adjustment, they can create different share classes and allocate the same among shareholders.

Family businesses can also adapt to changing circumstances due to this newfound versatility which caters to their evolving needs. In the process, they can cruise on the path to long-term sustainability.

Effective Mechanisms to Resolve Disputes

The introduction of robust dispute resolution mechanisms is one of the benchmarks of the New Family Business Law. In recent times, public disputes have shed light on the challenges that family-owned companies encounter. This often results in adverse consequences for the concerned business.

To address this issue, the law has established “’Family Business Dispute Resolution Committees”. While the effectiveness of these committees is yet to be seen, this marks a significant step toward preventing and resolving disputes. Historically, these disputes have jeopardised the stability of family businesses.

The New Family Business Law applies across all Emirates and free zones within the UAE. Therefore, family businesses across the country would have access to a consistent legal framework. This promotes fairness in their operations.

For professional assistance in personal holding company formation and management and succession planning, reach out to a professional expert at the IMC Group. We continue to be one of the pioneers in assisting family businesses in the UAE.

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The Evolution of Family Offices Towards Greater Professionalization
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The Evolution of Family Offices Towards Greater Professionalization

The concept of family offices has witnessed a profound transformation in recent years. Traditionally, they have been perceived as entities that affluent families entrusted for wealth management. From its basic structure, the model of a single family office in Dubai has evolved into a sophisticated and strategic institution. This professionalism marks a significant shift from the investment perspective regarding how family offices drive investment decisions, manage assets, and explore financial aspects.

In this newsletter, we will take a look into this shift towards the professionalization of family offices. We have also discussed some crucial considerations that family offices need to weigh to secure the wealth of their clients and grow it.

Factors prompting family offices to shift towards better professional standards

Traditionally, affluent families entrusted their financial assets to investment managers. However, investment managers struggled to achieve their target returns amidst economic uncertainties amidst the Global Financial Crisis of 2008 and then the pandemic. Naturally, affluent families started exploring alternative approaches. Consequently, the notion of professionalizing family offices gained traction since the move would empower executives engaged in such work to manage financial assets directly and report the same to family members.

The uncertainties in global markets and low-income returns have led to a decline in the trend of entrusting investment managers to manage the finances of families. This shift has left family offices in pursuit of greater control and peace of mind while consolidating all data in one central location. Naturally, this transition calls for the recruitment of skilled family office executives.

Key factors driving the professionalism of family offices

Let’s take a look at the key factors that have fuelled a higher level of professionalism in family offices in recent years.

1. Higher Complexity

With the global financial landscape becoming increasingly difficult to navigate, it’s imperative to carefully weigh different investment strategies and risks. Exploring complex regulatory environments continues to be a challenge for family offices. The market conditions are changing rapidly, and there is a plethora of asset classes to invest in. These evolving market conditions call for continuous vigilance, which calls for a higher degree of professionalism.

2. Better Expertise

Recognizing the need for specialized knowledge, family offices have been actively recruiting skilled professionals. These include legal experts, financial planners, investment analysts, and technologists. With fresh and relevant talent, family offices can conduct the necessary due diligence to identify emerging trends. This empowers them to capitalize on potential investment opportunities.

3. Advancements in Technology

The investment world has undergone a significant revolution with the digitization of technologies. For instance, family offices have been strategic in using data analytics, machine learning, and artificial intelligence to streamline their decision-making processes. These technologies empower them to evaluate vast datasets and make tactical investment decisions.

4. Exploring Investment Avenues

With adequate family office regulations in place along with growing professionalism, there has been an increasing tendency to explore alternative investments. For instance, expanding the portfolio with investments in real estate, hedge funds, venture capital, and private equity can be lucrative indeed. The return potential of these investments is much higher, but investing in these asset classes involves greater risk and complexity. Therefore, cultivating a risk-resilient approach in family offices requires higher standards of professionalism.

5. Global Perspective

Forward-thinking family offices are now looking beyond domestic markets to explore investment opportunities. This is a broader outlook that requires a deeper understanding of international currencies, markets, and demographic aspects.

Professionalization of the Family Office: Evaluating Risk vs. Reward

Professionalizing family offices comes with a multitude of perks. These include better access to diverse investment opportunities, better risk management, and the opportunity to use sophisticated technologies to make informed decisions. However, it’s crucial to focus on the challenges involved in the process as well. Some of the persisting concerns are equating the risk and reward ratio to optimize returns, align to the respective values and goals of each family, and maintain proper communication between professional staff and family members.

In the coming years, family offices are likely to undergo further professionalization. With the younger generations assuming leadership roles, they are likely to deploy even more tactical investment strategies to ensure greater transparency. Moreover, family offices need to adapt to changing family dynamics. Embracing evolving technologies and adapting to shifting investment trends, they can deliver value to their clients.

Case Study: IMC Group adds value to investments for clients

One of our family office clients invested in a startup focussing on green energy. We were supporting an existing management team that had created a promising business unit.

The Challenge

The management team possessed industry contacts and credibility to establish a new operation but relied on their previous firm’s finance department for financial planning, tax, and other crucial aspects.

Our Solution

We redesigned the group structure of this client and determined the residence location of this company based on practical factors. Next, we secured specific favorable VAT rulings for them. The professionals also came up with financial control mechanisms which encompassed measures for foreign exchange risk mitigation. In the process, we managed all derivative financial trading to support the financial needs of the business.

Results

It took us just three and a half years to put this client on a growth trajectory. Ultimately, it was sold for 23 times the original investment, delivering outstanding results for both the family office and the management team.

How can IMC Group assist you with family office services?

Being an affluent family, you know how demanding wealth management turns out to be. At IMC Group, we deliver comprehensive family office solutions to our clients. We also collaborate with our clients for succession planning for Dubai family offices. A seamless and holistic approach from our end will see you through unique challenges.

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Merger Control in the United Arab Emirates What You Need to Know
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Merger Control in the United Arab Emirates: What You Need to Know

With its strategic location, business-friendly environment, and openness to foreign investment, the United Arab Emirates (UAE) has become a key market for companies looking to expand their operations in the Middle East. However, businesses considering mergers and acquisitions services in Dubai need to be aware of the country’s merger control legislation and approval requirements.

Legislation and Regulators

The relevant legislation for merger control in the UAE is Federal Law No. 4 of 2012, known as the Competition Law, along with its implementing regulations under Cabinet Resolution No. 37 of 2014. Responsibility for reviewing mergers and acquisitions lies with the Competition Department of the Ministry of Economy.

The Competition Law is still in its early stages, having come into force in 2013. While it is modelled after EU competition law, there remain some gaps that are likely to be clarified through future cabinet resolutions. At present, there is limited precedent on how the law will be interpreted and applied.

Scope of the Legislation

The Competition Law requires parties to notify the authorities of any transaction that results in direct or indirect control of one entity over another, where the merged entity would hold a market share of at least 40%.

Unlike some jurisdictions, the UAE regime does not provide for voluntary notification – if the thresholds are met, notification is mandatory. The law applies to both full and partial acquisitions of interests, though the definition of “control” is not precisely specified.

The notification requirement extends to joint ventures and to transactions taking place abroad that may affect competition in the UAE markets. However, certain sectors like financial services, pharmaceuticals and transport are currently excluded from the scope of the Competition Law.

Assessment Criteria

The Competition Law sets out two main criteria for determining whether a proposed M&A transaction requires approval:

  1. The merged entity must have a market share of at least 40% post-transaction.
  2. The transaction must not adversely impact competition, such as by creating or enhancing a dominant market position.

While the 40% threshold is straightforward, the second substantive test creates some uncertainty. It appears to require a competition assessment even at the initial stage of evaluating whether notification is mandatory. It remains to be seen how this will be applied in practice.

Foreign Investment Considerations

Foreign-to-foreign deals must still be notified if the merged entity has UAE operations or sales exceeding the 40% local market share threshold. Separate approvals from sectoral regulators may also be required for foreign entities operating through local branches.

Regulators can exercise discretion to reject transactions based on public policy or national security factors, separate from competition law.

Strategic Considerations

For companies pursuing M&A opportunities in the UAE, here are some tips:

  • Assess at an early stage whether the 40% threshold will be exceeded to determine if notification is required.
  • Engage advisors to evaluate if a substantive competition assessment may be warranted even below the thresholds.
  • Be mindful of potential shareholding and foreign ownership restrictions in the relevant industry.
  • Involve advisors to coordinate regulatory approvals and navigate discretionary powers of government authorities.
  • Develop a timeline for the transaction that accounts for mandatory notification and approval periods.
  • Be prepared for limited precedents and possible lack of clarity on merger control review processes.

With support from experienced advisors like IMC Group, companies can effectively navigate UAE’s merger control regime. IMC offers comprehensive due diligence services in Dubai to help investors evaluate opportunities, risks and approval requirements for successful M&A execution in the UAE.

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New Conditions for Corporate Tax Exemptions in the UAE
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New Conditions for Corporate Tax Exemptions in the UAE

The United Arab Emirates (UAE) has introduced additional conditions for investment funds to qualify for tax exemptions, as part of its implementation of the corporate tax regime that began in 2023. The Cabinet announced these new requirements to provide clarity for funds looking to optimise under the new tax system. According to the UAE Ministry of Finance (MoF), the diversity of ownership criteria for funds, excluding Real Estate Investment Trusts (REITs), will be non-binding for the first two financial years after establishment. This provision allows new funds ample time to diversify their ownership structures to comply with the requirements.

For investment funds excluding REITs, the key highlights of the new corporate tax exemption conditions are as follows: The fund should primarily be engaged in investment activities, with non-core revenue not exceeding 5% of total annual revenue. No single investor and its related parties can hold over 30% or 50% ownership interest, depending on the total number of investors. The fund must be overseen by an investment manager with at least three investment professionals, and day-to-day management cannot be controlled by investors.

For REITs, the new conditions include a minimum real estate asset value (excluding land) of AED 100 million. At least 20% of the share capital must be publicly listed or wholly owned by two or more institutional investors. The trust must maintain an average annual real estate asset percentage of at least 70%.

The new regulations aim to ensure that funds benefiting from the tax exemption meet the UAE’s policy objectives around investment activities, investor diversity, governance, and fund management. The Ministry of Finance explains that the rules provide simplicity and flexibility for funds to optimise under the new regime while maintaining the UAE’s position as a leading investment destination.

Fund managers and investors are urged to review their current fund structures and ownership patterns to identify any potential non-compliance with the updated exemption conditions. Key considerations include assessing investor diversification against the defined threshold limits, evaluating the nature and mix of activities to meet core investment business tests, and for REITs, confirming that real estate asset values and share listings meet requirements. Consideration should also be given to the review of fund governance models, including manager credentials, and developing a roadmap to meet these rules within the allowed timeframes. By aligning with these exemption conditions, funds can minimise their corporate tax liability and uphold their value proposition for investors.

Given the novelty and untested nature of these regulations, a professional advisory is crucial for funds seeking to optimise their tax positions. IMC Group, a corporate tax advisory in Dubai, can help funds and investors interpret the new rules, identify areas for alignment, and develop clear strategies to meet compliance obligations while benefiting from exemptions. If you need more information and guidance on implementing robust corporate tax frameworks under the UAE’s new regime, contact IMC today.

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New Commercial Agency Law in UAE Offers Improved Flexibility for Foreign Companies
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New Commercial Agency Law in UAE Offers Improved Flexibility for Foreign Companies

The United Arab Emirates introduced Federal Law No. 3 of 2022 concerning the Regulation of Commercial Agencies on 15th June, ushering in several key changes that make it easier for foreign companies to do business in the country.

The new law replaces Federal Law No. 18 of 1981 and creates a more balanced relationship between commercial agents and foreign principals in the UAE. It broadens the definition of ‘commercial agent’ to include distributors, licensees and franchisees in addition to traditional agents. However, certain conditions must still be met, such as the agent conducting business in one of the categories required for commercial agency practice in the UAE.

Under the new law, the Cabinet can now approve international companies as commercial agents even if they are not owned by UAE nationals, provided the company does not already have an agent in the UAE and the agency is new. This is a significant step forward in enabling foreign companies to enter the UAE market without a local agent.

Commercial agencies in the UAE must still be granted exclusively, either for one or more of the seven emirates or nationally. Certain products and services, such as pharmaceuticals, also still require a registered commercial agent for import. While unregistered agents have no statutory right to exclusivity, this can be negotiated contractually.

Previously, there were limited grounds for terminating a registered commercial agency, but the new law provides more flexibility. Registered agreements can now be terminated by mutual consent, on 12 months’ notice by either party, upon expiry without renewal if 12 months’ notice is given, by court order, or as stipulated in the agreement. However, these new termination provisions will not apply to agencies registered before 15th June 2023 for two years. They will not apply at all to agencies registered for over 10 years or where the agent has invested over AED 100 million.

The new law also provides welcome changes to dispute resolution. While UAE courts retain jurisdiction, agreements can now specify alternative dispute resolution methods, including foreign arbitration, unlike under the previous law.

Conclusion

The new Commercial Agency Law provides a more fair and balanced legal framework for commercial agents and foreign companies in the UAE. However, existing arrangements should be reviewed to understand the implications of the changes. The UAE team at IMC Group has extensive experience advising on commercial agency and related matters in the UAE. Please get in touch for tailored guidance and support.

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Important Considerations for M & A in the UAE
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Important Considerations for M & A in the UAE

The United Arab Emirates (UAE) has emerged as a key market for mergers and acquisitions (M&A) activity in the Middle East, with several high-profile deals in recent years. However, there are some important aspects to consider for M&A transactions in the UAE that differ from other jurisdictions.

Private share sales and asset sales are the most common transaction structures. Share sales are popular as they cause minimal disruption, though due diligence can be challenging due to limited public information. Asset sales allow buyers to choose specific assets and liabilities but transferring assets and employees is logistically difficult.

For private companies, certain approvals are required depending on the target’s activity, such as from education or healthcare authorities. Financial institutions require extensive approvals, especially regarding anti-money laundering and know your customers requirements. If the combined market share of the parties exceeds 40%, merger control approval is needed from the Ministry of Economy.

Public deals require approval from the Securities and Commodities Authority (SCA), the market regulator. The SCA limits break fees in public transactions to 2% of the offer value. Otherwise, break fees are permitted but uncommon in private M&A.

Due diligence focuses heavily on information provided by the seller due to limited public records. Checks on the National Economic Register provide basic details for onshore companies, while DIFC and ADGM registers have more information for companies there. Credit reports from the AECB or Dubai Chamber can indicate financial position. Litigation, tax, employment, intellectual property, data protection and cyber security due diligence rely primarily on seller disclosure. Real estate ownership cannot be publicly searched, so title deeds and leases are also needed from the seller.

Finance comes from a mix of debt, including convertible loans, bank finance and peer-to-peer lending, and equity, such as private equity, venture capital, family offices and IPOs. Advisers typically include lawyers, financial advisers, tax advisers and occasionally pension actuaries. The target can pay adviser costs in private deals but not for public companies due to rules against financial assistance.

Conclusion

M&A in the UAE requires an understanding of the nuances in the legal and regulatory framework. IMC Group offers Transaction Advisory Services UAE and Mergers & Acquisitions Services Dubai to navigate clients through complex transactions. Please get in touch with IMC Group for advice tailored to your requirements.

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Estate Planning in the UAE: A Comprehensive Guide for Expats
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Estate Planning in the UAE: A Comprehensive Guide for Expats

As Dubai continues to establish itself as a wealth and asset management hotspot in the international finance landscape, it is essential for expatriates and non-Muslims with assets in the region to consider their estate planning options. This article aims to provide a comprehensive guide to the growing importance of the United Arab Emirates (UAE), particularly Dubai and the Dubai International Finance Centre (DIFC), and the various estate planning options available to different communities.

Dubai and the DIFC: A Global Finance Hub

The UAE’s D33 strategy has successfully transformed Dubai into a leading finance centre in the MENA region. The DIFC, a special economic zone within Dubai, has played a crucial role in this transformation, attracting high and ultra-high-net-worth families to establish a presence in the Emirate. With an increasing asset base in Dubai, it is vital for these individuals to incorporate their assets into their global tax and estate plan strategies.

The UAE makes a distinction between Islamic and Non-Islamic individuals when it comes to succession laws. For Muslims, Sharia Law is applied in the absence of a will, while non-Muslims can choose the laws of their nationality to govern the succession of their Emirati assets. In particular, UK expats are afforded the opportunity to apply English law, which offers testamentary freedom and allows for tailored estate planning.

Estate Planning Options for Islamic Clients

For those looking to prepare Sharia-compliant wills, trust structures are commonly used to ensure the estate passes in accordance with Sharia principles. In some cases, individuals may opt for corporate structures or foundations to provide beneficiaries with certainty over their inheritance.

Estate Planning Options for UK Expats (Non-Muslims)

UK expats in the UAE can benefit from applying English law to their Emirati assets, enabling bespoke estate plans that take into account the needs of beneficiaries and potential global taxes. This is particularly important for UK-domiciled and deemed-domiciled individuals who may be subject to UK inheritance tax. Many expats have chosen to structure their global estate through jurisdictions such as the Channel Islands, streamlining their estate planning across multiple jurisdictions while residing in Dubai.

Estate Planning Options for Non-UK Expats (Non-Muslims)

Non-UK, non-Muslim expats in the UAE can also explore alternative estate planning options, such as obtaining UK nationality and electing English law to govern their Emirati assets. This can help circumvent forced heirship laws in their country of origin while allowing for tax-efficient structuring.

Navigating estate planning in the UAE can be complex, but with the right guidance and support from experienced professionals, expats can successfully protect their assets and ensure their wishes are carried out upon their passing. Take help from consultancies such IMC Group to ensure the process is smooth and you get the best guidance navigating the laws.

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