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A Merger Agreement lays out the terms and conditions when two companies join forces to become a single entity. In the UAE, these binding contracts follow Federal Law No. 32 of 2021 (the Commercial Companies Law) and detail how the merger will unfold, from asset transfers to shareholder rights.

The agreement spells out crucial details like company valuations, leadership structure, and employee retention plans. It must address specific UAE requirements, including approval from the Securities and Commodities Authority for public companies and compliance with competition laws. Most importantly, it protects all parties by clearly defining their rights, obligations, and the roadmap for combining operations.

You need a Merger Agreement when combining two companies under UAE law, ideally starting negotiations 6-12 months before the intended merger date. This critical document becomes essential once initial talks progress beyond preliminary discussions and both parties want to formalize their intentions to merge.

Time it right - draft the agreement when you've completed due diligence but before making public announcements or starting regulatory filings with the UAE authorities. The agreement protects both parties during the sensitive pre-merger phase, especially when dealing with confidential information, employee transitions, and complex asset valuations. Getting it in place early helps avoid costly disputes and regulatory complications later.

• Forward Merger Agreement: Used when a smaller company merges into a larger one, transferring all assets and liabilities directly.
• Triangular Merger Agreement: Common in UAE holding structures, where a subsidiary is created to facilitate the merger, protecting the parent company.
• Stock-for-Stock Agreement: Shareholders exchange their existing shares for new ones in the merged entity, popular among UAE free zone companies.
• Asset Purchase Agreement Style: Focuses on specific asset transfers while leaving certain liabilities behind, common in partial business acquisitions.
• Cross-Border Merger Agreement: Contains additional provisions for international compliance when merging with foreign entities under UAE regulations.

• Board of Directors: Reviews and approves the Merger Agreement terms, representing shareholder interests in both merging companies.
• Corporate Lawyers: Draft and negotiate agreement terms, ensuring compliance with UAE Companies Law and relevant regulations.
• External Auditors: Validate financial statements and valuations crucial to the merger terms.
• Shareholders: Must approve the agreement through formal voting procedures under UAE law.
• Regulatory Bodies: The SCA and other relevant authorities review and approve merger agreements for public companies.
• Company Executives: Lead negotiations and implement post-merger integration plans outlined in the agreement.

• Company Details: Gather accurate legal names, trade licenses, and shareholding structures of both merging entities.
• Financial Records: Collect audited financial statements, asset valuations, and debt obligations from both companies.
• Due Diligence: Review corporate documents, contracts, licenses, and pending litigation affecting either company.
• Merger Terms: Define exchange ratios, consideration structure, and post-merger management setup.
• Regulatory Compliance: Check UAE merger control requirements and sector-specific regulations.
• Employee Matters: Document retention plans, benefits alignment, and UAE labor law compliance measures.
• Timeline Planning: Set realistic completion dates considering UAE regulatory approval periods.

• Party Identification: Full legal names, trade license numbers, and registered addresses of merging entities.
• Transaction Structure: Detailed description of merger type, consideration, and exchange ratios.
• Assets Transfer: Comprehensive list of properties, contracts, and liabilities being transferred.
• Conditions Precedent: Required regulatory approvals and shareholder consents under UAE law.
• Employee Provisions: Treatment of staff under UAE Labor Law post-merger.
• Representations & Warranties: Statements about company status, compliance, and material disclosures.
• Governing Law: Explicit reference to UAE Federal Law No. 32 and relevant emirate-specific regulations.

A Merger Agreement differs significantly from a Business Purchase Agreement. While both involve combining business interests, they serve distinct purposes under UAE commercial law.

• Legal Structure: Merger Agreements create a single merged entity where both companies combine their assets, liabilities, and operations. Business Purchase Agreements simply transfer ownership of specific assets or an entire business while maintaining separate legal entities.
• Regulatory Requirements: Mergers face stricter UAE regulatory scrutiny, requiring Securities and Commodities Authority approval for public companies. Business purchases often need simpler Department of Economic Development approvals.
• Employee Impact: Merger Agreements must address complete workforce integration under UAE Labor Law. Business purchases may allow more flexibility in selecting which employees to retain.
• Shareholder Rights: Mergers typically involve share exchanges and consolidated shareholder rights. Business purchases usually involve straightforward cash or asset transactions.