Shareholders’ Rights & Shareholder Activism 2025 Comparisons

The main types of corporate business entities in the United Arab Emirates (UAE) are:

• limited liability companies (LLCs);
• limited liability companies – single owner (LLC-SOs);
• sole establishments (SEs);
• public joint stock companies (PJSCs); and
• private joint stock companies (PrJSCs).

It has become easier and more attractive for foreign investors to establish a 100% foreign-owned corporate business entity in the UAE. Hence, the most commonly used type by foreign investors (especially multinational corporations) is the LLC-SO, for the following reasons:

• the LLC-SO can be owned by a single owner instead of being restricted to at least two shareholders;
• the LLC-SO can be managed by merely one sole manager instead of an appointment of a board of directors; and
• the LLC-SO is not yet subject to stringent corporate governance mandatory rules, although it is highly recommended to follow the procedures of corporate governance – hence, it faces less stringent requirements than PJSCs and PrJSCs as it is subject to fewer disclosure requirements.

Dual classes and multi-classes of shares are permitted namely in specialised free zones such as the Dubai International Financial Centre and the Abu Dhabi Global Market. They are also permitted in UAE offshore jurisdictions such as the Jebel Ali Free Zone and the RAK International Corporate Centre.

Such classes of shares are very common (particularly for companies that engage in frequent fundraising) as they allow companies to have shareholders with different voting rights.

The rights attaching to shares are usually set out in the memorandum and articles of association of the relevant company.

A shareholder that invests in a company, whether in cash or in kind, is entitled to the following rights.

• The right to share in the profits and losses of the company pro rata to its contribution to the company’s capital. If a shareholder’s share is limited to work, the memorandum of association/articles of association should specify its share in the profits and losses.
• The right to exercise its pre-emptive right if another shareholder wishes to sell its shares to a non-shareholder.
• The right to attend and vote on specific matters in general assembly meetings. Each shareholder will have a number of votes equal to the number of the membership interests it owns or represents.
• The right to nominate, appoint and remove directors.
• The right to call for special board meetings.
• The right to decide on the dissolution of an LLC by shareholders holding one quarter of the capital, if the losses of the LLC reach three quarters of its capital.

The minimum capital requirements apply as follows for these corporate business entities:

• LLC – no minimum requirements;
• LLC-SO – no minimum requirements;
• SE – no capital is required;
• PJSC – the minimum capital required is AED30 million; and
• PrJSC – the minimum issued capital required must not be less than AED5 million.

The following is a brief overview of the legal and ownership structures of the main corporate business entities in the UAE.

• The LLC should be owned by two to 50 shareholders, whether individuals or corporate entities.
• The LLC-SO should be owned by only one shareholder, whether an individual or corporate entity.
• The SE should be owned by only one owner, whether an individual or corporate entity.
• The PrJSC should not be owned by fewer than two shareholders, whether individuals or corporate entities. However, as an exception, the PrJSC could be owned by one shareholder only, in which case its name should be followed by the wording “Sole Proprietorship – Private Joint Stock Company”.
• The PJSC should not be owned by fewer than five shareholders, whether individuals or corporate entities. Its shares are publicly traded on the stock exchange markets.

Private companies in the UAE sign shareholders’ agreements between shareholders of the same corporate business entity and/or joint venture agreements between two or more corporate businesses entities.

Shareholders’ agreements/joint venture agreements are typically used to govern the commercial, business and legal understanding between the shareholders on matters that are usually not mentioned explicitly in the official constitutional documents of the corporate entity (such as the memorandum of association). The typical provisions in such agreements are the following:

• capital injection (such as operational capital);
• borrowing loans;
• transfer of shares (such as tag-along and drag-along rights);
• dual class of shares;
• intellectual property rights; and
• distribution of profits and losses.

The company should have an annual general assembly meeting consisting of all the shareholders. The general assembly should be convened by an invitation from the manager or the board of managers at least once per year within the four months following the end of the fiscal year of the company. The general assembly should be convened at the time and place set out in the letter of invitation to convene.

The invitation of the annual general assembly to convene should be announced before at least 21 days from the date set for the meeting.

All the shareholders of the company should be notified by registered letters or through the modern technology means stipulated in the company’s memorandum of association.

Regarding which decisions should be adopted during the annual general assembly, the matters and issues to be discussed and considered typically relate to the following:

• the managers’ report on the activity and financial position of the company during the ended fiscal year, the auditor’s report and the Supervisory Board’s report;
• the balance sheet and the account of profits and losses, and the approval thereof;
• the profits to be distributed among the shareholders;
• the appointment of the managers and determination of their remuneration;
• the appointment of the members of the board of managers (if any);
• the appointment of the members of the Supervisory Board (if any);
• the appointment of the members of the Internal Sharia Control Committee and the Sharia Controller, if the company conducts its activity in accordance with the provisions of Islamic Sharia;
• the appointment of the auditor(s) and determination of their remuneration; and
• any other matter within the competencies of the general assembly pursuant to the provisions of the UAE Company’s Law or the memorandum of association of the company.

Other general assembly meetings could convene during the same year, if the manager invites the general assembly of the LLC at the request of one or more shareholders holding at least 10% of the company’s capital.

One or more shareholders owning together a minimum of 20% of the company’s capital may, for serious reasons, direct a request to the board of directors of a JSC to have a general meeting called. In such case, the board must call the meeting within a period of five days from the submission of the request.

Shareholders owning together 10% of the company’s capital have the right to call an extraordinary general meeting to have a special resolution passed. To do so, they must direct a request to the Securities and Commodities Authority and must provide all the supporting documents.

See 2.1 Types of Meeting, Notice and Calling a Meeting.

See 2.1 Types of Meeting, Notice and Calling a Meeting.

Every partner, irrespective of the number of shares they own, shall have the right to attend the general assembly meetings in person and may delegate another person who is not a manager to represent them at the general assembly. Every shareholder shall have a number of votes equal to the number or percentage of shareholdings they own or represent.

The UAE Companies Law gives shareholders the right to access the company’s register of members, which includes the names, addresses, nationality and shareholding percentage in the company. The shareholders have the right to inspect the register of members and to obtain a copy of the register of members, provided that a written request is submitted specifying the purpose for which the information is sought.

The general assembly meetings may be held by means of modern technology for remote attendance, and the shareholders may participate in their deliberations and vote on the meetings’ decisions.

The general assembly’s meeting shall not be deemed valid unless attended by a number of shareholders holding at least 50% of the company's capital, except if the company’s memorandum of association provides for a higher percentage.

See 2.8 Shareholder Approval.

There are several matters that require shareholders’ approval, such as:

• increasing and decreasing the share capital of the company; and
• amending the memorandum of association of the company.

These require the consent of a number of shareholders representing at least three quarters of the shareholding percentage in the meeting of the general assembly.

Furthermore, the following require unanimous consent:

• mergers and/or acquisitions of the company; and
• increasing the financial obligations of the shareholders.

The decisions of the general assembly shall be deemed valid only if they are passed by the majority of the shareholding represented at the meeting, unless the memorandum of association provides for a higher majority.

Shareholders do have the right to request or propose that a specific matter or issue be included in the agenda and considered at a shareholders’ meeting, provided a formal written request is submitted to the company detailing the agenda of the meeting and/or the addition of any item on the agenda, and requesting a vote accordingly.

A shareholder has the right to challenge a resolution passed at a general meeting if such decision is detrimental to the company as a whole and to the shareholder’s interests.

Institutional shareholders in the UAE comprehend a range of practices whereby they take on an active role in influencing a company’s strategy, governance and performance.

Institutional shareholders tend to engage actively in shareholder activism, typically through proxy voting or direct communication with company management. Their activism is inclined towards improving returns on investment and advocating for stronger governance policies. They generally view activism as a legitimate and necessary tool to ensure accountability.

Shareholders using nominees in the UAE should retain the fundamental right to receive information and vote, which must be exercised through the nominee by providing them with instructions and ensuring that their rights are upheld in a shareholder agreement or a nominee agreement. The company is obligated to disclose relevant information and facilitate voting, while the nominee must disclose the ultimate beneficial owner’s (UBO) details upon request to relevant authorities in accordance with Cabinet Decision No 109/2023 regulating ultimate beneficial ownership. The core principle is that the beneficial owner’s rights should be protected, even if the nominee holds the shares in the company’s register with the registrar.

However, the relevant competent authorities/registrars are reluctant to communicate directly with the UBO and to treat them as the legal owner, since the UBO’s name is not mentioned explicitly on the official documents of the company, except where the UBO obtains a court order. This is the case where the nominee refuses to comply with the UBO’s instructions with respect to voting and decisions and to return the UBO’s shares, and the relationship turns sour. Consequently, several legal cases have been filed with UAE courts in order for the UBO to claim their rights in the company.

The shareholders could pass written resolutions without convening a meeting; however, this would require unanimous consent of all the shareholders, and should be explicitly permitted in the memorandum of association of the company.

Pursuant to the UAE Companies Law, and depending on the legal form of the company, a company considering increasing its capital could do so through either:

• issuing new shares;
• increasing the par value of each share; or
• capitalisation of its reserve.

The existing shareholders shall have the pre-emptive right to subscribe to the new shares. Any provision to the contrary in the company’s memorandum of association or the decision to increase the issued capital shall be deemed null and void.

Some restrictions apply to the transfer of shares to a non-shareholder in a PrJSC prior to the elapsing of six months, commencing from the date of registration of the company in the commercial register.

However, during the prohibition period, it is permitted to transfer shares to existing shareholders.

A shareholder may mortgage its shares in the company to another shareholder or to a third party. Such mortgage shall be made pursuant to the provisions of the memorandum of association of the company under an official notarised agreement. It shall not be enforceable towards the company or third parties except from the date of its entry in the commercial register with the relevant competent regulatory authority.

In the UAE, the disclosure of share ownership depends on the legal form of the company – whether it is a PJSC or merely a private company such as an LLC or PrJSC. For a listed PJSC, a shareholder whose ownership is equivalent to or exceeds 5% of the capital of the listed PJSC, or whose ownership is equivalent to or exceeds 10% of a subsidiary, sister or parent company of the listed PJSC, needs to disclose such ownership to the financial market exchange (ie, the Dubai Financial Market (DFM) or the Abu Dhabi Securities Exchange (ADX)).

The UAE also introduced Cabinet Decision No 109/2023 regulating ultimate beneficial ownership. Under this Decision, it is mandatory for shareholders or beneficial owners of legal entities to disclose their ownership and status to the registrar (ie, the competent authority where such company is registered), whenever such natural person owns or exercises ultimate control over the company, through shares or stocks of direct or indirect ownership by 25% or more of the company’s capital, or has the right to vote in it by 25% or more, including holding that ownership through a chain of ownership or control or through control by any other means. Where no natural person is identified, the natural person who holds the position of a higher management official shall be deemed as the UBO.

No information is available on the topic of share cancellation.

A PJSC may not mortgage its own shares or purchase such shares unless the purchase is intended to decrease the capital or to redeem the shares. In such event, such shares shall have no vote in the deliberations of the general assembly meetings or a share of the profits.

The general assembly of the company shall determine the percentage of net profits to be distributed to the shareholders after deducting the statutory reserve of 10% of the net profits of the company and the optional reserve.

The company’s memorandum and articles of association may provide for the distribution of annual, semi-annual or quarterly profits.

The shareholders, through a general assembly meeting, elect the board members by secret cumulative vote. For PJSCs and PrJSCs, the chairman and the majority of the board must be UAE nationals.

The general assembly may dismiss/remove any or all of the board members, even if the company’s statute or articles of association provide otherwise. In such case, the general assembly must elect new board members to replace those dismissed.

The shareholders of a company have the right to challenge decisions taken by the directors. The directors shall be liable to the company, the shareholders and third parties due to acts of negligence, error, fraud, abuse of power or concluding deals or transactions involving conflicts of interest, as well as for violating:

• UAE Federal Decree Law 32/ 2021 on Commercial Companies;
• any other applicable law; or
• the company’s statute, memorandum or articles of association.

Pursuant to the UAE Companies Law, appointment of one or more auditors for a company should first be nominated by the board of directors and presented to the general assembly of shareholders for approval.

The general assembly shall appoint the auditor(s) for one renewable year.

The company may, under a decision taken by its general assembly, dismiss/remove the auditor(s).

The directors have a statutory and ethical duty to report to shareholders on the company’s corporate governance arrangements, particularly pursuant to the Securities and Commodities Authority’s comprehensive framework for public JSCs, emphasising transparency, disclosure, fairness and accountability to shareholders.

A controlling company – particularly, acting through the directors it appoints – has duties and potential liabilities to the minority shareholders of the company it controls, such as a duty of care, a fiduciary duty and a duty of loyalty.

The controlling company is bound by actions and decisions made by its directors that have been carried out under their competence; hence, it owes the same duties as that of the directors towards the company it controls and its minority shareholders in the case of fraud, wilful acts, mismanagement and abuse of power.

During a liquidation procedure, a liquidator is appointed whose main duty is to all the company’s creditors.

The liquidator will distribute the company’s assets to priority creditors before other creditors. Common priority debts are employees’ wages and payments for ends of service, banks and taxes.

The shareholders will only get paid any return on their shares in an insolvent liquidation after all creditors get paid in full.

Shareholder disputes can arise from issues such as breaches of fiduciary duty, mismanagement or failure to adhere to corporate governance practices.

Litigation brought by shareholders against the company and/or its directors could take the form of any of the following actions:

• derivative action on behalf of the company when the company fails to take actions against its directors;
• personal actions due to deprivation of rights, such as failure to declare dividends or prevention of voting rights; or
• an injunction, such as seeking a court order to prevent a merger that is deemed detrimental to minority shareholders’ interests.

See 10.1 Remedies Against the Company.

See 10.1 Remedies Against the Company.

In the UAE, there are several regulations that govern shareholder rights and activism.

• Federal Law No 32/2021 on Commercial Companies governs the rights and obligations of shareholders, including voting rights, rights to dividends and rights to information.
• Securities and Commodities Authority Decision 3/2020, amended by the Securities and Commodities Authority’s Board of Directors Decision No 2/2024 concerning the Joint Stock Companies Governance Guide. These rules govern shareholder rights and emphasise the importance of transparency and accountability.
• The Company Rulebook – issued on 7 February 2023 pursuant to the Virtual Assets and Related Activities Regulations 2023 (amended on 19 May 2025) of the Dubai Virtual Assets Regulatory Authority – regulates corporate governance and primarily focuses on ensuring transparency, fair practices and investors’ protection within the virtual assets market.
• Decision of the Chairman of the Securities and Commodities Authority’s Board of Directors No 18/2017 regulating the acquisition, merger and takeover of listed PJSCs.
• UAE Financial Markets Regulations, such as the DFM, the ADX, the Dubai Financial Services Authority and the Financial Services Regulatory Authority. Each has its own set of rules and regulations that govern market activities, including those related to shareholder rights and activism.

Insider trading and market abuse laws are applicable to activist activities in the UAE. While the legal framework in the UAE provides a strong basis for protecting shareholder rights and facilitating shareholder activism, activists must also navigate complex regulations regarding insider trading and market abuse. Due diligence and adherence to all applicable laws and regulations are essential when engaging in activist activities.

Shareholder activism in the UAE comprehends a range of practices whereby shareholders – whether institutional or retail – take on an active role in influencing a company’s strategy, governance and performance for increased accountability and transparency.

Activist shareholders may employ several strategies to build their stakes and pursue their agendas. The following are some common strategies and potential agendas they might pursue:

• increasing ownership stakes by purchasing shares to exert influence, positioning themselves to have a voice in decision-making processes;
• engaging and communicating with the company’s management to express their views and propose changes;
• collaborating with other significant stakeholders or institutional investors to amplify their influence and achieve a common agenda;
• focusing on enhancing corporate governance practices, advocating for transparency, accountability and better board oversight; and
• improving shareholder value by pushing for better financial performance through cost-cutting, operational efficiency or restructuring initiatives.

Activist shareholder behaviour has been increasingly noted across various industries in the UAE, reflecting global trends. Some insights into the observed trends include the following.

• Given the UAE’s booming real estate sector, activist shareholders have increasingly targeted firms within this space. These companies often face scrutiny regarding governance, management practices and project execution.
• Banks and financial institutions have also come under the attention of activist investors, particularly in terms of transparency and risk management. Investment firms emphasise better financial disclosures and accountability to enhance shareholder value.

Generally, activist shareholders tend to target mid- to large-cap companies, where they perceive they can effect changes due to substantial ownership stakes.

Specific groups or types of shareholders tend to be more active than others in the UAE – particularly, hedge funds and institutional investors.

There is no readily available comprehensive data on this specific topic due to the nature of governance and civil society dynamics in the UAE.

To protect themselves against an activist campaign, companies may adopt several proactive and reactive measures.

The role of the board of directors is an important and primary one, as it plays a key part in shareholder engagement, open communication, and responding to activist requests and demands. Directors can help ensure that the company anticipates which activists might target the company, and which issues they might raise. They can encourage management to proactively address common issues that are attracting attention and that might lead to activism. In many cases, these issues require careful attention and should be reflected in company strategy.

The following are useful strategies that a company may adopt to mitigate the risk of shareholder activism.

• Corporate social responsibility initiatives should be communicated to highlight the company’s commitment to social and environmental objectives. This can help mitigate criticism from activists.
• Implementing mechanisms and systems for shareholders to provide feedback and concerns, ensuring that their voices are heard and considered in decision-making.
• Collaborating with other companies and organisations of the same industry to present a unified stance on issues that might attract activism.
• Maintaining an active and positive social media presence to counteract any negative campaigns, and engaging with followers and addressing concerns in real-time.

The key is to be proactive rather than reactive.