Offshore Company Shareholders Agreement (UAE)

An Offshore Company Shareholders Agreement in the United Arab Emirates is a private contract among the shareholders of a UAE offshore company — typically incorporated with the Ras Al Khaimah International Corporate Centre (RAK ICC) or the Jebel Ali Free Zone Authority (JAFZA Offshore) — that governs the shareholder relationship, management authority, dividend policy, share transfers, reserved matters, deadlock resolution, and exit mechanisms. UAE offshore companies are legal entities incorporated for holding, investment, asset protection, and international business purposes rather than for conducting direct commercial activity within the UAE market.

RAK ICC is regulated by the Ras Al Khaimah International Corporate Centre Authority, established by Decree No. 12 of 2015 issued by the Ruler of Ras Al Khaimah, while JAFZA Offshore companies are administered by the Jebel Ali Free Zone Authority under the Jebel Ali Free Zone Laws. Both authorities apply the Commercial Companies Law (Federal Decree-Law No. 32 of 2021) as the overarching federal framework, supplemented by their own offshore company regulations. The UAE Civil Code (Federal Law No. 5 of 1985) governs the contractual obligations between shareholders, and the Corporate Tax Law (Federal Decree-Law No. 47 of 2022) imposes tax registration and filing obligations on all UAE-incorporated entities including offshore companies.

UAE offshore companies are used for a wide range of legitimate holding and investment purposes: holding shares in subsidiaries across the GCC and internationally; holding UAE real estate in designated freehold zones where the Dubai Land Department (DLD) or the relevant emirate land authority permits offshore company ownership; holding intellectual property licensed to operating subsidiaries; structuring joint ventures between international partners who prefer a UAE holding vehicle to an onshore arrangement; family wealth planning where assets need to be held outside the personal estate; and estate planning for non-Muslim expatriates who wish to direct the succession of UAE-situated assets. The Dubai Land Department and the Abu Dhabi Department of Municipalities and Transport have each published guidance on the conditions under which offshore companies may hold UAE property.

A Shareholders Agreement supplements the company's constitutional documents — the Articles of Association or Memorandum and Articles — filed with the offshore authority. The Agreement records private arrangements that the constitutional documents cannot accommodate: reserved matters requiring unanimous approval, pre-emption rights on share transfers, dividend policy, non-competition undertakings, and exit mechanisms. Without a written Shareholders Agreement, disputes between the offshore company's owners must be resolved under the offshore authority's default regulations and UAE federal law, which may not reflect the parties' commercial intentions.

The anti-money laundering framework under Federal Decree-Law No. 26 of 2021, Cabinet Decision No. 58 of 2020, and the FATF-aligned regulations of each offshore authority requires offshore companies to maintain accurate beneficial ownership registers and to conduct customer due diligence through their registered agents. The Personal Data Protection Law (Federal Decree-Law No. 45 of 2021) applies to the processing of personal data of UAE residents by offshore company shareholders and directors. Electronic signatures are valid under the Electronic Transactions and Trust Services Law (Federal Decree-Law No. 46 of 2021).

An Offshore Company Shareholders Agreement in the United Arab Emirates is needed when two or more shareholders hold equity in a UAE offshore company and wish to record their private governance arrangements, protect their investment, and establish clear rules for decision-making and exit.

Family wealth structures frequently use a UAE offshore holding company to consolidate diverse assets — UAE real estate, shares in mainland and free zone operating companies, and international investments — under a single holding vehicle. Where multiple family members hold equity in the holding company, a Shareholders Agreement is essential to define decision-making authority, dividend distribution, and the mechanism for resolving disagreements, protecting the family's investment from governance disputes.

International joint ventures between foreign partners who need a neutral UAE holding structure benefit from a RAK ICC or JAFZA Offshore company as the joint venture vehicle. The Shareholders Agreement governs the allocation of management responsibilities, the reserved matters that require both parties' consent, the allocation of profits, and the mechanism for the eventual exit of one or both parties — typically a put option, call option, or Russian roulette clause.

Asset protection structures in which an entrepreneur holds a UAE offshore company above their UAE and international operating subsidiaries require a Shareholders Agreement to document the relationship between the holding company shareholders and to establish clear lines of authority, preventing one shareholder from taking unilateral action that could affect the entire group.

Estate planning arrangements in which shares in the offshore company are held by a foreign trust or foundation require the Shareholders Agreement to address the transfer of shares on the death or incapacity of an individual beneficial owner, to prevent disruption to the business when the trust or estate transitions to new beneficiaries. The Ministry of Economy and the UAE's anti-money laundering unit require offshore companies to maintain accurate beneficial ownership records, and a clear Shareholders Agreement supports that compliance obligation.

A UAE Offshore Company Shareholders Agreement must contain the following elements to be effective and to reflect the regulatory requirements of the relevant offshore authority. The forms-legal.com template addresses each component.

Party identification must record the full legal name and jurisdiction of each shareholder. Corporate shareholders must provide their registered name, jurisdiction of incorporation, and company registration number, together with the authority of the representative signing on their behalf under the Commercial Companies Law (Federal Decree-Law No. 32 of 2021). Beneficial ownership information must be consistent with the records filed with the offshore authority under Cabinet Decision No. 58 of 2020.

Company details must identify the offshore company by name, the incorporating authority (RAK ICC or JAFZA Offshore), and the company's purpose or investment objectives. The purpose must be consistent with the activities permissible under the authority's offshore regulations — generally holding, investment, and asset protection, not direct UAE commercial activity.

Share capital and shareholding must record the total authorised and issued share capital in USD or AED, the number of shares held by each shareholder, and the percentage interest represented. The Agreement should confirm that shares are fully paid and that no unpaid capital calls remain outstanding.

Management authority must name the appointed director or manager and set out the scope of their authority, distinguishing day-to-day management from reserved matters. Reserved matters requiring unanimous or supermajority approval should include disposal of material assets, incurring significant debt, granting security, amending the constitutional documents, and changing the authority or jurisdiction of the company.

Pre-emption rights must require a selling shareholder to offer their shares to the other shareholders before selling to any third party, at the same price and on the same terms, protecting each shareholder's proportionate interest.

Dividend policy must state how and when dividends will be declared and paid, in what currency, and the required approval threshold. The absence of UAE withholding tax on dividends under the Corporate Tax Law (Federal Decree-Law No. 47 of 2022) should be noted, with a reminder that the recipient shareholder's jurisdiction may impose its own tax.

Deadlock and exit mechanisms must provide commercially rational solutions when the shareholders cannot agree on a reserved matter or when one shareholder wishes to exit. Common mechanisms include Russian roulette, tag-along and drag-along rights, and compulsory purchase at fair market value.

Governing law and dispute resolution must specify UAE law (and the authority's regulations) as governing law and identify the dispute forum — the Dubai International Arbitration Centre (DIAC), the ADGM Courts, or the DIFC Courts — reflecting the international character of most offshore company arrangements.

Completing a UAE Offshore Company Shareholders Agreement requires the shareholders to agree on the key commercial terms before the document is finalised and executed.

Start with the parties. Each shareholder should provide their full legal name and, for corporate shareholders, their registered name, jurisdiction of incorporation, and company registration number. Verify that the beneficial ownership records of the offshore company — filed with the RAK ICC or JAFZA Offshore as required by Cabinet Decision No. 58 of 2020 — are consistent with the Agreement.

Identify the offshore company. Confirm the full registered name, the incorporating authority, and the company's current status with the authority (whether incorporated or in the process of being formed). State the company's purpose — holding shares in subsidiaries, holding UAE property, international investment, or a combination — in specific terms, because the Agreement's scope flows from this purpose.

Record the share capital and shareholding. Enter the total authorised and issued share capital in USD (most offshore companies use USD as the accounting currency), the number of shares held by each shareholder, and the resulting equity percentages. Confirm that these figures match the register of members filed with the authority.

Name the director and describe their management authority. Set the reserved matters — typically high-value transactions, asset disposals, debt incurrence, and constitutional changes — and the approval threshold for those matters. Practical drafting sets the threshold at unanimous approval for a two-shareholder company.

Choose the dividend policy. Options range from declaring dividends pro rata by majority resolution whenever cash flow permits, to requiring unanimous agreement for any distribution. The chosen policy should reflect the company's liquidity needs and the shareholders' tax positions in their countries of residence.

Set the pre-emption procedure. Specify the timeline within which the other shareholders must respond to a sale notice — 30 days is standard — and the mechanism for determining the price if the parties cannot agree (typically a RICS-accredited or comparable independent valuer).

Choose the deadlock and exit mechanism. Russian roulette is simple and effective for two-shareholder companies. Include a drag-along right to allow a majority seller to compel the minority to sell, and a tag-along right to protect the minority seller.

Select the dispute resolution forum and confirm UAE governing law. Both founders sign — electronic signatures are valid under the Electronic Transactions and Trust Services Law (Federal Decree-Law No. 46 of 2021). Download from forms-legal.com as PDF or Word.

A UAE Offshore Company Shareholders Agreement draws its legal force from the UAE Civil Code (Federal Law No. 5 of 1985), which governs the formation, validity, and performance of contracts between the parties, and from the Commercial Companies Law (Federal Decree-Law No. 32 of 2021), which provides the overarching corporate law framework for UAE entities including offshore companies.

RAK ICC offshore companies are incorporated under the Ras Al Khaimah International Corporate Centre Authority Regulations, while JAFZA Offshore companies are incorporated under the Jebel Ali Free Zone offshore company regulations. Both sets of regulations govern the constitutional documents, share transfer restrictions, directorship requirements, annual reporting, and winding-up procedures for each type of entity.

Beneficial ownership registration is mandatory under Cabinet Decision No. 58 of 2020, which requires all UAE companies — including offshore companies — to maintain an up-to-date beneficial ownership register filed with the incorporating authority. The anti-money laundering framework under Federal Decree-Law No. 26 of 2021 requires offshore companies and their registered agents to conduct customer due diligence and report suspicious transactions.

The Corporate Tax Law (Federal Decree-Law No. 47 of 2022) requires UAE offshore companies to register with the Federal Tax Authority (FTA) and file annual returns. The Qualifying Free Zone Person provisions may apply to offshore holding companies that meet the economic substance, qualifying income, and other conditions. VAT obligations under Federal Decree-Law No. 8 of 2017 apply where the company makes taxable UAE supplies. The Personal Data Protection Law (Federal Decree-Law No. 45 of 2021) applies to the processing of personal data of UAE residents. Electronic execution of the Agreement is valid under the Electronic Transactions and Trust Services Law (Federal Decree-Law No. 46 of 2021).

Shareholders in UAE offshore companies regularly encounter the following errors that create regulatory, tax, or governance problems.

1. Using the offshore company to conduct direct UAE commercial activities. An offshore company cannot directly trade goods or provide services within the UAE without a separate trade licence from the relevant Department of Economic Development or free zone authority. Conducting unauthorised UAE commercial activity through an offshore company breaches the Commercial Companies Law (Federal Decree-Law No. 32 of 2021) and the offshore authority's regulations.

2. Failing to maintain accurate beneficial ownership records. Cabinet Decision No. 58 of 2020 requires all UAE entities including offshore companies to file and update beneficial ownership registers. Non-compliance attracts administrative penalties and may result in the company being struck off the register.

3. Assuming no UAE taxes apply. The Corporate Tax Law (Federal Decree-Law No. 47 of 2022) applies to UAE offshore companies. Failure to register with the Federal Tax Authority (FTA) and file annual returns attracts penalties. The 0% Qualifying Free Zone Person rate is conditional and must be assessed annually.

4. Holding UAE real estate without DLD approval. Not all UAE jurisdictions or areas permit offshore company ownership of real property, and ownership without the Dubai Land Department's or relevant emirate authority's approval may not be legally recognised. Confirm the permitted structure before purchasing property through an offshore company.

5. No Shareholders Agreement — relying only on the constitutional documents. The Memorandum and Articles of Association filed with the offshore authority do not address reserved matters, pre-emption, dividend policy, or exit. Without a private Shareholders Agreement, disputes default to the authority's regulations, which may not reflect the parties' intentions.

6. Signing the Agreement without confirming the signatory's authority. Corporate shareholders must sign through a duly authorised representative backed by a board resolution and, where needed, a notarised and apostilled power of attorney.

7. Not addressing succession in the Shareholders Agreement. If an individual shareholder dies, their shares form part of their estate and may pass under UAE federal personal status rules unless a DIFC or ADGM will or a foreign trust structure is in place. A buy-sell mechanism in the Agreement supports business continuity.