Merging Two UAE Companies: Procedure, Creditor Rights, and Approvals

Federal Decree-Law No. 32 of 2021 on Commercial Companies, as amended by Federal Decree-Law No. 20 of 2025, allows two or more companies to merge by contract. The target either joins an existing company, which is a merger by absorption, or the merging companies combine into a new company, which is a merger by consolidation. In both forms the surviving company takes over the rights and obligations of the companies that cease to exist.

• There are two forms. In a merger by absorption, the surviving company increases its capital and the target is deregistered, while in a merger by consolidation a new company is incorporated and all merging companies are deregistered.
• Shareholders approve by special resolution. The general assembly or partners of each company must approve the merger contract by the majority needed to amend the company’s memorandum of association.
• Creditors must be notified. Each company must notify its creditors after the approval and publish notice in two local daily newspapers, at least one of them in Arabic.
• Creditors have 30 days to object. A creditor who does not object within 30 days of the notice is treated as having accepted the merger.
• Large mergers need competition clearance. Under the UAE merger control rules, a transaction with combined UAE turnover above AED 300 million or a combined market share above 40% must be notified before closing.
• Group restructurings may be tax-neutral. Business Restructuring Relief under Article 27 of the Corporate Tax Law can defer tax on a merger that meets its conditions.

Who this applies to

This applies to founders, chief financial officers and boards of mainland UAE companies planning to combine two businesses, consolidate group companies or absorb a subsidiary. It concerns family groups simplifying their structures, investors integrating a business they have acquired, and foreign groups with several UAE entities. Groups in financial services and real estate face additional regulatory approvals.

Our corporate lawyers in the UAE structure and manage statutory mergers, from the merger contract to creditor notices and registration. This article covers mergers between companies governed by the Commercial Companies Law. Our article on share purchase versus asset purchase covers the alternatives, and our article on when to restructure a UAE company covers the wider decision.

The legal framework

• Federal Decree-Law No. 32 of 2021 on Commercial Companies. The Commercial Companies Law contains the merger provisions, including the merger contract, shareholder approval, creditor notice and objection, the rights of dissenting partners and the effect of the merger.
• Federal Decree-Law No. 20 of 2025. It amended the Commercial Companies Law with effect from 1 January 2026. The Ministry of Economy and Tourism describes the changes, including new routes to transfer a company between emirates and between the mainland and free zones.
• Federal Decree-Law No. 36 of 2023 on Competition and its executive rules. The merger control rules require notification of economic concentrations above the turnover and market share thresholds.
• Federal Decree-Law No. 47 of 2022 on Corporate Tax. Article 27 provides Business Restructuring Relief for qualifying mergers and transfers of a business.

The administering bodies:

• The licensing authority of each emirate. In Dubai the Department of Economy and Tourism, and in Abu Dhabi the Department of Economic Development, approve and register the merger and amend or cancel trade licences.
• The Securities and Commodities Authority. It approves mergers involving public joint stock companies.
• The Ministry of Economy and Tourism. It receives merger control notifications and decides whether a concentration may proceed.

The two forms of statutory merger

The Commercial Companies Law allows a merger by absorption and a merger by consolidation. The choice affects which company survives, which licences remain and how the shareholders of each company receive their stake.

Merger by absorption

In a merger by absorption, the target company joins an existing company. The surviving company increases its capital to issue shares to the target’s shareholders, and the target is deregistered. The surviving company keeps its licence, its registration number and its contracts, so this form suits a group that wants to keep its main operating company.

Merger by consolidation

In a merger by consolidation, the merging companies combine into a new company, and each of them is deregistered. The new company needs a new licence and new registrations. This form suits two businesses of similar size where neither side wants to be absorbed by the other.

Mergers within a group

Where a holding company merges with a subsidiary it owns, the law provides a simpler procedure without a full merger contract, subject to a special resolution of the subsidiary. This route suits group restructurings that remove dormant or duplicate entities.

The merger procedure step by step

A statutory merger moves through valuation, the merger contract, shareholder approval, creditor notice and registration. Each step depends on the one before it, so the timetable is set by the slowest approval.

Valuation and the merger contract

The boards or managers of the merging companies first agree the value of each company and the exchange ratio, which is the number of shares in the surviving company each target shareholder receives. The merger contract then sets out the terms, the memorandum and articles of the surviving or new company, the proposed managers or directors and the method of allocating shares. For public joint stock companies, the Securities and Commodities Authority may require an independent valuation.

Shareholder approval

The general assembly or the partners of each company must approve the merger contract by special resolution, at the majority required to amend the company’s memorandum of association. In a limited liability company, partners who oppose the merger have the right to withdraw and receive the value of their shares instead of becoming partners in the surviving company. Shareholders holding at least 20% of the capital who opposed the resolution may also challenge it before the competent court within 30 days.

Creditor notice and objection

After approval, each company must notify its creditors and publish notice of the merger in two local daily newspapers, at least one in Arabic. Creditors then have 30 days to object. A creditor who objects may ask the company to pay the debt or provide security, and may apply to the court if the objection is not settled. A creditor who stays silent is treated as having accepted the merger.

Registration and effect

Once the objection period ends and any objections are resolved, the licensing authority registers the merger. The merged company ceases to exist, and the surviving or new company becomes the owner of its assets and the debtor of its obligations by operation of law. Contracts, receivables and liabilities pass without individual assignment, subject to any consent rights in the contracts themselves.

Approvals beyond the merger itself

The Commercial Companies Law procedure is only one part of the timetable. Regulators, counterparties and the tax authority may each have a say.

Competition clearance

Under the UAE merger control rules, the parties must notify the Ministry of Economy and Tourism before completing a transaction that meets either threshold. The first is combined annual UAE turnover above AED 300 million, and the second is a combined market share above 40%. A merger completed without a required clearance exposes the parties to fines. Our article on merger control filings in the UAE explains the test and the review periods.

Sector regulators and counterparties

Banks, insurers, healthcare providers and other licensed businesses need their regulator’s approval before a merger changes who controls them. Commercial contracts may also contain change of control or anti-assignment clauses that give the counterparty a right to consent or terminate. A legal due diligence review should identify these clauses before the merger contract is signed.

Property and employees

Real estate owned by the merged company must be re-registered in the name of the surviving company with the land department of the relevant emirate. Employees transfer to the surviving company, and their length of service continues for end of service purposes. The surviving company must update visas and work permits with the Ministry of Human Resources and Emiratisation and the immigration authorities.

Corporate tax

Under Article 27 of the Corporate Tax Law, Business Restructuring Relief allows a qualifying merger, or a transfer of a business in exchange for shares, without immediate tax on the gain. The relief can be withdrawn if the shares or the business are sold within two years. Our article on corporate tax group relief and losses covers related group rules.

Free zone companies and cross-emirate structures

The Commercial Companies Law merger procedure applies to companies governed by that law. Free zone companies follow the companies regulations of their free zone, and DIFC and ADGM companies follow their own laws, such as the DIFC Companies Law. A direct merger between a mainland company and a free zone company is therefore not available under the mainland procedure.

The 2025 amendments created another route. A company may now transfer its registration between emirates, or between the mainland and a free zone, while keeping its legal identity, subject to shareholder approval and the consent of both licensing authorities. A group can use that transfer to bring two companies under the same regime before merging them. Our article on the 2026 Commercial Companies Law changes covers the transfer rules.

Common mistakes in UAE mergers

Choosing a merger when a share purchase would do. A merger takes the target’s liabilities into the surviving company. Where the buyer wants to keep the target’s risks separate, a share acquisition that leaves the target as a subsidiary may be safer.

Underestimating creditor objections. A single objecting creditor can delay registration until it is paid or secured. Large lenders and landlords should be approached before the notice is published.

Ignoring change of control clauses. Some contracts allow the counterparty to terminate on a merger even though the law transfers them automatically. Losing a key customer or lease can remove much of the value of the deal.

Missing the competition filing. Parties that pass the thresholds must notify before completion. Treating the merger as an internal matter does not remove that obligation where the companies are not already under common control.

Losing tax relief after the merger. A sale of the shares or business within two years can withdraw Business Restructuring Relief and bring the deferred tax back.

What companies planning a merger should do next

• Decide between merger and acquisition. Compare a statutory merger with a share or asset deal, because each treats liabilities, licences and creditors differently.
• Complete legal due diligence on both companies. Identify debts, disputes, change of control clauses, licences and real estate before the merger contract is drafted.
• Agree valuation and the exchange ratio. Fix the value of each company and the shares each side receives, with independent support where minority shareholders are involved.
• Map every approval. List the licensing authority, competition, sector regulator and contractual consents, with the time each one takes.
• Engage key creditors early. Speak to banks, landlords and major suppliers before the notice is published, to reduce the risk of objections.
• Check Business Restructuring Relief. Confirm with tax advisers that the merger meets the Article 27 conditions and plan around the two-year period.

How long does it take to merge two companies in the UAE?

The statutory procedure itself turns on the shareholder approvals, the 30-day creditor objection period and registration with the licensing authority. Competition clearance, regulatory consents and creditor negotiations can take longer than the statutory steps, so a merger needs a plan that progresses them in parallel.

The main risk is treating the merger as paperwork. A merger transfers every liability of the target, gives creditors a right to object and can trigger termination rights in key contracts, so the legal review must come before the merger contract.

The commercial consequence of getting it right is a single company that holds the combined business without re-papering every contract. The cost of getting it wrong is a delayed registration, an unplanned tax charge or the loss of the contracts that justified the deal.

For groups planning a merger or consolidation, our corporate and commercial team advises on merger structure, merger contracts and the approvals needed to complete the combination.