Joint Ventures 2026 Comparisons

Despite conflict in the Middle East, joint venture (JV) activity in the UAE has remained strong. JV parties have, however, become more cautious: some now prefer outright acquisitions for the speed and control they offer. At the same time, joint ventures remain attractive where parties wish to share risk and invest in stages. Furthermore, geopolitical events have generally delayed transactions and extended approval periods.

Nonetheless, the UAE continues to benefit from a growing network of economic partnership agreements. Looking ahead to 2027, the authors expect further investment and consolidation in strategic sectors, with joint ventures continuing to support domestic growth and foreign investment into the UAE.

Technology and energy have generated significant joint venture activity in the UAE. Growth in artificial intelligence, cloud services and data centres has been supported by the UAE’s digital strategy and investment in computing capacity. Renewable energy, infrastructure, advanced manufacturing and real estate have also remained active because of continued economic diversification, population growth and major development projects.

Emerging technology affects both the structure of the venture and the matters covered by its agreements. Data is increasingly treated as a key contribution alongside capital and intellectual property. The parties must therefore specify who may collect, access, use and share data; whether it may be used to train AI systems; where it will be stored; and how cross-border transfers will be managed under the federal, the Dubai International Financial Center (the DIFC) or the Abu Dhabi Global Market (the ADGM) data-protection regime. The documents should also distinguish intellectual property contributed by each party from technology developed by the venture and allocate ownership of AI-generated outputs.

Joint ventures in the UAE may be structured as equity-based or contractual arrangements, depending on the parties’ objectives. An equity joint venture involves establishing a separate legal entity owned by the partners. It is generally suited to long-term collaboration or where a standalone corporate identity, licence or regulated vehicle is required. The limited liability company is the most common vehicle, whose liability is generally limited to their capital contributions. Full foreign ownership is permitted in most sectors, subject to restrictions on activities with strategic impact. ADGM and DIFC private companies are also popular where the parties prefer a common law governance framework.

A contractual joint venture does not require a separate entity. The parties remain independent and operate under an agreement setting out their respective roles, contributions and profit-sharing arrangements. This structure is generally used for specific projects or short-term collaborations, or where establishing and licensing a separate entity would be impractical. Its main advantage is flexibility, while its principal disadvantage is the absence of a corporate liability shield, requiring liability and risk to be managed contractually.

The main factors regarding JV structuring are the parties’ identity and jurisdiction, whether the venture is privately or government-backed, its sector and where it will operate. For mainland UAE-based equity joint ventures, licensing requirements, foreign ownership restrictions on activities with strategic impact and the number and complexity of shareholders influence the choice of vehicle. DIFC or ADGM entities may be preferred where common law governance or free zone regulation is important, although separate approvals may be required to operate in mainland UAE. For contractual joint ventures, the key issue is whether the proposed activities may be undertaken without a separately incorporated and licensed entity. The parties should also consider profit and loss allocation, rights to assets and revenue, risk-sharing, governance, control and accounting treatment.

Tax is also a central consideration. A mainland UAE-incorporated joint venture is a separate taxable person and is generally subject to corporate tax at 9% on taxable income exceeding AED375,000. DIFC and ADGM entities also fall within the federal corporate tax regime. A qualifying free zone person may benefit from the 0% rate on qualifying income only if the applicable substance, de minimis, transfer pricing and audited financial statement requirements are met. An unincorporated joint venture is generally tax-transparent, with each partner accounting for its share, but may apply for Federal Tax Authority approval to be treated as a taxable person. Transactions with related parties must be conducted on an arm’s length basis.

The principal legislation governing UAE mainland-incorporated joint ventures is the Commercial Companies Law, Federal Decree-Law No 32 of 2021, as amended by Federal Decree-Law No 20 of 2025, which regulates their formation, governance and dissolution. Contractual joint ventures are governed by their agreements and Federal Decree-Law No 25 of 2025 Promulgating the Civil Transactions Law and Federal Decree-Law No 50 of 2022 Promulgating the Commercial Transactions Law. Competition matters fall under Federal Decree-Law No 36 of 2023 Regulating Competition. Incorporated joint ventures in the DIFC are governed by the Companies Law, DIFC Law No 5 of 2018, as amended, while those in the ADGM are governed by the ADGM Companies Regulations 2020, as amended.

The UAE’s anti-money laundering framework is set out in Federal Decree-Law No 10 of 2025 regarding Anti-Money Laundering and Combating the Financing of Terrorism and Proliferation Financing and Cabinet Resolution No 134 of 2025 issuing its Executive Regulations. It applies across the mainland and the commercial and financial free zones. In the DIFC, it is supplemented by the Anti-Money Laundering, Counter-Terrorist Financing and Sanctions Module of the Dubai Financial Services Authority (the DFSA) Rulebook and the DIFC Ultimate Beneficial Ownership Regulations 2018. In the ADGM, the corresponding instruments are the Financial Services Regulatory Authority (the FSRA) Anti-Money Laundering and Sanctions Rules and Guidance and the ADGM Beneficial Ownership and Control Regulations 2022.

Federal Decree-Law No 10 of 2025 regarding Anti-Money Laundering and Combating the Financing of Terrorism and Proliferation Financing and Cabinet Decision No 74 of 2020 require compliance with UAE and United Nations sanctions. Relevant DIFC and ADGM entities are also subject, respectively, to the DFSA Anti-Money Laundering, Counter-Terrorist Financing and Sanctions Module and FSRA Anti-Money Laundering and Sanctions Rules and Guidance. Parties should screen their partners, ultimate beneficial owners and funding sources.

Competitors must limit information-sharing and co-operation to what is necessary for the venture under Federal Decree-Law No 36 of 2023 Regulating Competition. A jointly controlled venture may also require merger clearance.

The UAE has no general cross-sector foreign investment screening regime. Foreign investors may own 100% of most mainland companies, but strategic-impact activities under Cabinet Resolution No 55 of 2021 may be subject to national ownership, board or approval requirements. These include defence, financial services, telecommunications, currency printing, specified religious services and fisheries.

The DIFC and ADGM generally permit 100% foreign ownership, although regulated financial services require DFSA or FSRA approval. Separate licensing may be required for mainland operations.

Federal Decree-Law No 36 of 2023 Regulating Competition, Cabinet Resolution No 59 of 2026 and Cabinet Decision No 3 of 2025 prohibit horizontal and vertical restrictive agreements, including price-fixing, output restrictions, market or customer allocation and bid-rigging, and abuse of dominance. A market share above 40% establishes dominance, but broader market-power factors are also assessed.

A jointly controlled JV may constitute an economic concentration. Notification is required where combined annual sales in the relevant UAE market exceed AED300 million or combined market share exceeds 40%. Filing must occur at least 90 days before completion, and closing of the transaction is suspended pending clearance; parties should think of including a clearance condition and realistic long-stop date in applicable JV establishment documents.

Where a joint-venture party is listed, no additional requirements attach to the joint venture itself, but the listed party must continue to observe the securities laws, continuous disclosure obligations and corporate governance standards applicable to listed companies. A material transaction may therefore need to be disclosed to the market and, depending on its size relative to the company, may require shareholder approval.

Under UAE federal regulations, disclosure of ultimate beneficial ownership is mandatory under Cabinet Resolution No 109 of 2023, which regulates the beneficial owner procedures and applies to all mainland entities and entities in the economic free zones. Certain entities must maintain a register of beneficial owners, file the information with the licensing authority and update it when circumstances change. A beneficial owner is an individual who ultimately owns or controls at least 25% of the shares or voting rights, or who otherwise exercises control over management. In the DIFC, the Ultimate Beneficial Ownership Regulations 2018 require entities to maintain a UBO register, file particulars with the Registrar and report changes within 30 days. A UBO includes a natural person holding at least 25% of shares or voting rights, entitled to appoint or remove a majority of directors, or otherwise exercising significant control.

In the ADGM, the Beneficial Ownership and Control Regulations 2022, as amended, apply to entities other than branches of foreign companies or partnerships. They require records of beneficial owners and controllers and notification of changes to the Registration Authority within 15 days. The ADGM applies a similar ownership threshold as the DIFC.

The defining development of the last three years is the amendment of the Commercial Companies Law by Federal Decree-Law No 20 of 2025, which has materially improved the UAE’s federal regime for joint ventures. Companies may now issue multiple classes of shares carrying different rights, so that preferred returns, weighted or non-voting quotas and liquidation preferences can be built directly into the capital structure of a mainland limited liability company. Drag-along and tag-along rights, together with succession and deadlock mechanisms, may now be included in the constitutional documents, giving them enforceability against the company and third parties rather than existing only as contractual agreement between shareholders. The reforms also permit corporate re-domiciliation, extend the law’s reach to foreign companies with a UAE presence and to free zone companies conducting onshore activities. The practical effect is that complex joint venture arrangements which were previously pushed into free zones or offshore holding structures can now be implemented onshore.

Negotiations usually begin with a mutual non-disclosure agreement to protect information exchanged during due diligence, followed by heads of terms or a memorandum of understanding recording the key commercial points on a non-binding basis. Where one party contributes a unique asset or opportunity, an exclusivity or lock-out arrangement is common. At this stage the parties usually agree on the intended ownership split and capital contributions, the governance principles including board composition and veto rights, the scope of the venture’s business, the funding and profit-distribution mechanics, the conditions to be satisfied before completion, and the governing law and dispute resolution forum.

There is no general obligation to make a joint venture public at the negotiation stage. Disclosure obligations arise in specific circumstances where the venture meets the merger-control thresholds and must be notified to the competition authority before completion; where a party is listed and the transaction is material enough to require market disclosure or shareholder approval; where the venture operates in a regulated sector requiring prior approval and therefore disclosure to the relevant regulator; and, on formation of the entity, where beneficial ownership information must be filed with the licensing authority.

Joint venture agreements usually include conditions precedent revolving around obtaining any required sector approvals, securing competition clearance where required, executing the ancillary agreements, completing the licensing authority’s KYC checks, delivering the necessary corporate authorisations and legal opinions, and the absence of any material adverse change. Material adverse change clauses are negotiated, and in the current geo-political and economic climate a higher focus is placed on them, particularly around regional conflict, sanctions and commodity price movements. Force majeure is a recognised concept under UAE law, excusing performance where an event beyond a party’s control renders performance impossible rather than merely more onerous, and it has become a focal point of negotiation given regional instability, with parties defining triggering events carefully and specifying whether the consequence is suspension, renegotiation or termination.

Establishing a UAE mainland limited liability company involves reserving the trade name, preparing and notarising the constitutional documents, obtaining initial approvals from the economic department and any sector regulator, completing the anti-money laundering and KYC requirements, contributing the share capital and obtaining the trade licence. The timeline ranges from a few days to several weeks depending on the complexity of the venture and the jurisdiction. There is no fixed minimum capital for a limited liability company established in the mainland UAE beyond the requirement that it be adequate to the company’s purpose, and free zone entities are subject to the capital requirements of the relevant authority.

In the DIFC, incorporation proceeds through the Registrar of Companies under DIFC Companies Law No 5 of 2018. The application includes the name and activities, articles, corporate approvals, ownership and UBO/KYC details, and evidence of a registered office. Regulated financial activities require prior DFSA approval.

In the ADGM, incorporation proceeds through the Registration Authority under the ADGM Companies Regulations 2020. Similar constitutional, ownership, KYC and premises information is required, although notarisation is unnecessary unless requested. FSRA approval is required for regulated financial activities.

For an equity joint venture the documentation comprises the joint-venture or shareholders’ agreement, which governs the relationship between the parties as owners, the constitutional documents filed with the licensing authority, and a suite of ancillary agreements such as intellectual property licences, services and secondment agreements, supply or offtake arrangements and parent guarantees. At the federal level, the reforms to the commercial companies law introduced by Federal Decree-Law No 20 of 2025 Amending Certain Provisions of Federal Decree-Law No 32 of 2021 on Commercial Companies have shifted the balance between the shareholders’ agreement and the company’s constitutional documents, since protective terms that once were incorporated only in the shareholders’ agreement can now be included in the constitutional documents of the company and thereby made enforceable against the company itself. For a contractual joint venture a single collaboration agreement can include all of these functions, defining each party’s scope of work, cost allocation, profit and loss sharing, liability, intellectual property ownership and termination.

Certain fundamental decisions are reserved to the shareholders and typically require a supermajority or unanimity, including amendments to the constitution, changes to capital or share classes, approval of the annual budget and business plan, material related-party transactions and borrowing, changes to the venture’s scope, and dissolution. The board or management committee takes strategic and operational decisions within the parameters the shareholders set, with seats generally allocated in proportion to shareholding, although weighted voting is now available following the recognition of differentiated share classes. Day-to-day operations are delegated to the appointed managers, and the JV entity’s shareholder agreement and constitutional documents should mark a clear difference between management authority and matters requiring board or shareholder approval.

JV entities are typically funded through a combination of equity contributions made on incorporation, shareholder loans, and third-party debt supported where necessary. The agreement should address whether the parties are obliged to meet future funding calls and the consequences of a failure to do so, which may include dilution, default or a forced transfer of the defaulting party’s interest, together with any anti-dilution protection and pre-emption rights on new issues. Where future funding alters the ownership balance, the agreement should specify whether board representation and reserved-matter thresholds are to be recalculated.

Deadlock is addressed through a series of mechanisms, starting with referral to the senior executives of each party for a defined negotiation period, followed where necessary by mediation, and then by a structured buy-out such as a put or call option, a mechanism under which one party’s offer to buy compels the other either to sell or to buy at the same price. Winding up the venture and, ultimately, recourse to the courts remain the options of last resort.

Depending on the sector, the arrangement is commonly supported by intellectual property and technology licences, services and management agreements, secondment or employment arrangements for key personnel, supply and offtake contracts, asset transfer agreements, lease assignments and parent company guarantees or comfort letters, alongside continuing confidentiality undertakings.

In an incorporated venture profits are distributed in accordance with the constitutional documents, and the parties may agree profit-sharing ratios that differ from their equity percentages, subject to the requirement to set aside a statutory reserve. In a contractual venture profit and loss allocation is a matter of agreement. Non-compete and non-solicitation obligations are enforceable provided they are limited in purpose, duration and territory and are proportionate to the interest protected, and including consideration for adherence strengthens enforceability. Liability for the venture’s debts is limited to capital contributions in an incorporated structure, whereas in a contractual venture liability turns on the terms of the agreement and the nature of the underlying obligations.

Minority shareholders benefit from a combination of statutory and contractual protection. Federal Decree-Law No 20 of 2025 Amending Certain Provisions of Federal Decree-Law No 32 of 2021 on Commercial Companies confers pre-emption rights on share transfers, the right to vote in proportion to ownership, the right of shareholders holding at least a tenth of the capital to convene a general meeting, rights to inspect the company’s records and protection against resolutions that unfairly prejudice minority interests. These are supplemented contractually by reserved matters requiring enhanced consent, guaranteed board representation, information and audit rights, tag-along rights, anti-dilution protection and put options exercisable on specified default events.

The DIFC Companies Law No 5 of 2018 and the ADGM Companies Regulations 2020 provide similar safeguards, including statutory pre-emption on new share issues, rights to receive accounts and inspect specified records, protections for class rights, meeting-requisition rights and court remedies for unfairly prejudicial conduct. In both jurisdictions, issue-pre-emption rights may be excluded or disapplied only as permitted by the applicable legislation.

Parties are free to choose the governing law of their agreement, and while the constitution of a mainland entity must comply with the Commercial Companies Law, the shareholders’ agreement itself is frequently governed by English, ADGM or DIFC law in international ventures, with UAE law more common for domestic mainland arrangements. On dispute resolution, arbitration is the usual choice for cross-border ventures, whether seated at one of the UAE’s arbitration centres or under international rules, while the DIFC and ADGM courts are increasingly selected for their common law procedure and English-language proceedings, and the onshore courts remain appropriate for domestic ventures. As a signatory to the New York Convention, the UAE enforces foreign arbitral awards through a streamlined application to the execution judge, and domestic arbitration is governed by the Federal Law No 6 of 2018 Concerning Arbitration, as amended by Federal Decree-Law No 15 of 2023 Amending Certain Provisions of Federal Law No 6 of 2018 Concerning Arbitration as amended.

The board of an equity joint venture is generally structured to mirror the ownership split, so that in an evenly held venture each party appoints an equal number of directors and a casting vote or independent chair is provided to break ties, while in a majority-minority structure the majority appoints most of the directors with the minority guaranteed at least one seat. There are no nationality restrictions on the managers of a mainland limited liability company.

Under Federal Decree-Law No 32 of 2021 on Commercial Companies, as amended, directors and managers of mainland companies must act within their powers, exercise due care, protect the company’s interests, avoid misuse of office and disclose conflicts, abstaining from voting where required. Their duties are owed to the company.

The DIFC Companies Law, DIFC Law No 5 of 2018, and the ADGM Companies Regulations 2020 impose similar duties, including promoting the company’s success for shareholders as a whole, exercising reasonable care, skill and diligence, avoiding conflicts and declaring interests. A board may delegate functions to individual directors, committees or third parties where permitted by the regulations and the constitutional documents. Matters reserved to the board or shareholders cannot be delegated, and directors remain responsible for supervising any delegate.

The board must ensure that annual financial statements and any required reports are prepared, audited where applicable, circulated to shareholders and filed or presented for approval. JV documents commonly require additional reporting, including management accounts, budgets and business plans.

For companies incorporated in the UAE mainland jurisdiction, Federal Decree-Law No 32 of 2021 on Commercial Companies, as amended, requires a director to disclose any direct or indirect conflict before the relevant matter is considered. A conflicted director must not participate in the discussion or vote, and the disclosure and decision should be recorded in the minutes. Appointment by, or employment with, a joint venture partner does not automatically disqualify the director, but transactions involving that partner may require additional board or shareholder approval.

In the DIFC and ADGM, directors must avoid conflicts and disclose the nature and extent of any interest under the DIFC Companies Law No 5 of 2018 and the ADGM Companies Regulations 2020. A conflict may be authorised by the non-conflicted directors or shareholders where permitted by the applicable law and articles. Whether the interested director may participate or vote will depend on those provisions and the terms of the authorisation.

At the outset, the parties should identify the intellectual property each party will contribute to the joint venture (“Background IP”) and clearly record its ownership. Background IP is generally licensed, rather than assigned, to the joint venture. This allows the joint venture to use the IP while ownership remains with the contributing party and the licence can be terminated when that party exits or the joint venture ends.

The parties should also agree who will own any intellectual property created by the joint venture (“Foreground IP”), including any developments or improvements to the Background IP. Where the joint venture will use a party’s brand or trade marks, the parties should enter into a trade mark licence addressing matters such as permitted use, quality control, territory, duration and termination.

The same considerations apply to a contractual joint venture, although the parties’ rights will be governed entirely by the joint-venture agreement. Clear drafting is therefore important to avoid disputes over ownership and use. Assignments and licences of registered trade marks and patents should also be recorded with the UAE Ministry of Economy where required to be effective against third parties. Cross-border licensing arrangements must comply with applicable transfer pricing requirements and may have tax consequences in the licensor’s jurisdiction.

Licensing is generally more suitable for a joint venture because it allows the contributing party to retain ownership of its intellectual property and continue using it in its own business. A licence can also be limited by purpose, territory and duration and terminated when the joint venture ends or the contributing party exits. Licence fees should be determined on an arm’s length basis in accordance with applicable transfer pricing requirements.

An assignment may be appropriate where the intellectual property has been developed exclusively for the joint venture and has no separate value to the contributing party. It may also be required where the joint venture needs full ownership to enforce the rights, grant sub-licences or facilitate a future sale of the business.

An assignment permanently transfers ownership of the relevant rights, subject to any agreed reversion provisions. A licence only grants the joint venture defined rights to use the intellectual property. The licence should therefore specify whether it is exclusive, the permitted scope of use and what happens to the licensed rights when the joint venture terminates.

Environmental, social and governance (ESG) matters are becoming increasingly important when structuring joint ventures in the UAE. This reflects the UAE’s Net Zero 2050 strategy, federal climate change legislation and the sustainability reporting obligations or expectations applicable to listed companies. International investors, lenders and other counterparties also commonly impose ESG requirements as a condition of their participation.

Joint venture agreements increasingly include ESG standards, reporting and audit obligations, board-level oversight and a clear allocation of responsibility for environmental compliance and emissions. They may also provide for remedial action or termination following a serious environmental or governance breach.

ESG performance may affect a joint venture’s access to financing, insurance and government contracts. It should therefore be addressed as a substantive part of the joint venture’s governance and risk allocation arrangements.

An incorporated joint venture may be dissolved on the expiry of its agreed term, the achievement of its purpose, a resolution of its shareholders, insolvency or liquidation, or a court order following an unresolved dispute or deadlock.

A contractual joint venture will generally terminate when the relevant project is completed, its agreed term expires, the parties agree to terminate it, a party commits a material breach, a force majeure event makes performance impossible, or a party becomes insolvent.

The joint-venture agreement should set out the consequences of termination. These normally include settling outstanding liabilities and third-party obligations, dealing with the joint venture’s assets, terminating intellectual property licences and returning Background IP, addressing employees, preserving confidentiality and any continuing restrictive covenants, and completing any required tax and regulatory procedures. For an incorporated joint venture, the parties may also need to liquidate and deregister the entity, cancel its licences and notify the relevant authorities.

The treatment of assets on termination depends on how they were originally contributed. Where a party retains ownership and only licenses or makes an asset available to the joint venture, the asset should generally return to that party. The joint-venture agreement should specify the applicable value, valuation procedure and treatment of depreciation, improvements, liabilities and tax.

Where ownership of an asset has been transferred to an incorporated joint venture, the asset belongs to the joint venture and will not automatically return to the contributing party. On liquidation, the asset may be sold or distributed only after the joint venture’s liabilities have been settled and in accordance with applicable law and the constitutional documents.

Assets created or acquired by the joint venture, including intellectual property, customer relationships and goodwill, should be dealt with in the manner agreed by the parties. The parties should also consider whether third-party consent is required to assign contracts, whether change-of-control provisions may be triggered and whether licences or permits can be transferred. Employees will generally need to be terminated and rehired because UAE law does not provide for their automatic transfer. Transfers of real property may also require registration and payment of the applicable fees.

The parties have broad freedom to agree the circumstances and procedures for exiting a joint venture, subject to the applicable commercial companies law and the constitutional documents of the joint-venture entity. Federal Decree-Law No 20 of 2025 Amending Certain Provisions of Federal Decree-Law No 32 of 2021 on Commercial Companies has increased the flexibility available to shareholders when structuring governance and economic rights of an entity incorporated in mainland UAE, including the ability to include tag-along and drag-along rights in the constitutional documents. The constitutional documents of DIFC and ADGM companies which are governed separately by the DIFC Companies Law No 5 of 2018 and the ADGM Companies Regulations 2020, may contain bespoke share classes, transfer restrictions, tag-along, drag-along and other exit rights.

Share transfers must nevertheless comply with applicable statutory pre-emption rights and the company’s constitutional documents. Federal Decree-Law No 32 of 2021 on Commercial Companies also provides a procedure for dealing with a shareholder’s interest following death, including valuation by agreement or, where the parties cannot agree, by the court. Any distribution from profits must also take account of the applicable statutory reserve requirements.

Common exit arrangements include lock-up periods, put and call options, negotiated buy-outs and trade sales supported by tag-along and drag-along rights. Successful joint ventures may also convert into public joint-stock companies and proceed to an initial public offering. In practice, a negotiated buy-out at fair market value is the most common exit route, while liquidation is generally used only where no viable alternative is available.