The validity of a nominee shareholder agreement in the UAE

Federal law No. 2/2015 on Commercial Companies:

Breach of the percentage of contributions by UAE nationals: fine from AED 20,000 to 200,000 (Art. 353)

Providing statements in violation of the law: imprisonment between 6 to 12 months and fine from AED 200,000 to 1,000,000 (Art. 361)

Distribution of profits or interests in violation of the law: imprisonment between 6 months to 3 years and fine from AED 50,000 to 500,000 (Art. 363);

Federal law No. 17/2004 concerning Anti-Fronting Law, the objective of which was to prohibit nominee shareholder agreement with UAE nationals and renders such arrangements invalid, but also imposes sanctions for breach of the law.

Sanctions can be imposed on both the local partner and the foreign investor and include fines of up to AED100,000 ($27,000) and possible imprisonment for a period of up to two years.

Please contact me for further consultation.

Hi,

I trust you are well. The response to your query mainly depends on what has been mentioned in the nominee shareholder agreement. We're happy to review the agreement for you and provide appropriate guidance in terms of relevant UAE laws.

For further information, please contact us via phone or email.