2025 Legal Due Diligence Checklist for UAE Acquisitions

The 2025 Legal Due Diligence Checklist for Business Acquisitions in the UAE

The United Arab Emirates (UAE) remains a global hub for commerce, attracting significant cross-border investment and supporting an active Mergers and Acquisitions (M&A) market. That growth also calls for a rigorous, specialised approach to legal due diligence. For an acquisition to succeed, the buyer must work through a legal landscape that is constantly being refined by new federal laws, regulatory updates and changing compliance standards.

Related: Explore our free zone company formation services for foreign investors in the UAE.

In 2025, the stakes are higher than ever. The introduction of Corporate Tax, enhanced Ultimate Beneficial Ownership (UBO) requirements and updated merger control thresholds mean that a generic, international due diligence checklist is simply insufficient. To reduce risk, uncover hidden liabilities and ensure a smooth transition, investors must rely on a comprehensive, UAE-specific legal due diligence (LDD) framework.

This article sets out an in-depth legal due diligence checklist for the UAE, tailored to the 2025 regulatory environment. It is designed to guide both local and international investors through the acquisition process.

The Changing UAE M&A Landscape in 2025

Nour Attorneys advises clients on complex UAE legal matters, with a focus on identifying and addressing risks before they escalate. This section explains the regulatory developments that shape legal due diligence for business acquisitions in the UAE and what they mean for your position as a buyer.

Related: Explore our real estate law advisory and legal title verification services in the UAE.

The UAE's legal framework is known for its adaptability, which helps it stay competitive on the global stage. This continuous change, however, demands constant vigilance during an M&A transaction.

Key Regulatory Shifts Affecting Due Diligence

1. Corporate Tax implications. The introduction of Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses (Corporate Tax Law) has fundamentally changed the financial and legal risk assessment. LDD must now rigorously examine the target company's preparedness for, and compliance with, the new 9% corporate tax regime, effective for financial years starting on or after June 1, 2023. This includes reviewing tax group eligibility, transfer pricing policies and historical tax filings (VAT and Excise Tax) to ensure no latent tax liabilities pass to the buyer.

2. Ultimate Beneficial Ownership (UBO) compliance. Federal Decree-Law No. 37 of 2022 concerning the UBO has placed significant emphasis on transparency. A critical part of LDD is verifying that the target company has accurately identified, registered and maintained its UBO data with the relevant licensing authority. Non-compliance can result in substantial fines and regulatory scrutiny, which makes UBO verification a non-negotiable checklist item.

3. Updated merger control thresholds. While competition law in the UAE is still developing, the Federal Competition Law (Federal Decree-Law No. 36 of 2023) and subsequent Cabinet Ministerial Decrees have refined the rules for economic concentration. For instance, recent decrees may have established new turnover thresholds (e.g., a combined turnover exceeding AED 300 million) that trigger mandatory merger filing with the Competition Regulation Committee. Failure to file can lead to the transaction being unwound or significant penalties.

4. Foreign ownership and free zones. The landmark amendments allowing 100% foreign ownership in many mainland sectors continue to simplify the process. LDD must still confirm the specific licence type, the jurisdiction (Mainland, Free Zone or Offshore) and any remaining restrictions tied to the target company's activities.

These legal requirements are complex and interconnected, and they call for specialised expertise. Engaging a dedicated legal partner is not merely advisable; it is essential. For comprehensive support in structuring and executing your transaction, consider consulting a specialist business acquisition lawyer.

The Core Legal Due Diligence Checklist

A thorough LDD process is typically structured into several key phases, each focusing on a distinct area of legal risk.

Phase I: Corporate Structure and Governance

This phase focuses on the target company's legal existence and operational integrity. Each item below lists what to review and the risk it addresses.

• 1. Constitutional documents: Review the Memorandum of Association (MoA), Articles of Association (AoA) and all amendments. Focus: verify legal capacity, authorised activities and proper corporate formation.
• 2. Trade licences and permits: Confirm the validity and scope of all trade licences, commercial registrations and operational permits. Focus: ensure the company is legally permitted to conduct all its current business activities in its jurisdiction.
• 3. Share capital and ownership: Examine the share register, historical transfers and evidence of paid-up capital. Focus: confirm clear title to the shares being acquired and identify any encumbrances or pre-emption rights.
• 4. Corporate resolutions: Review the minutes of all Board and Shareholder meetings, especially those authorising the transaction. Focus: confirm that the target company has taken all necessary internal steps to approve the sale.
• 5. UBO compliance: Verify the accuracy of the UBO register and its filing status with the relevant authority. Focus: avoid regulatory fines and ensure compliance with anti-money laundering (AML) regulations.

Phase II: Contractual and Commercial Review

The contractual review is crucial for understanding the target company's operational commitments and the potential liabilities arising from its commercial relationships.

6. Material contracts. Identify and review all contracts deemed "material" to the business, including:

• Customer and supplier agreements: Look for long-term commitments, unfavourable pricing clauses and, most importantly, change of control clauses. A change of control clause may allow a counterparty to terminate or renegotiate the contract upon the acquisition, potentially reducing the target's value.
• Financing and loan agreements: Review all debt instruments, guarantees, security interests and covenants. Ensure the acquisition will not trigger a default.

7. Real estate and assets. Verify the legal title and ownership of all real estate (leased or owned) and significant movable assets. In the UAE, this involves checking land department records and ensuring compliance with the specific property laws of the relevant Emirate.

8. Insurance policies. Review all current insurance coverage (property, liability, key-man) to ensure adequate protection is in place and that the policies will remain valid after the acquisition.

Phase III: Employment and Labour Law Compliance

UAE Labour Law (Federal Decree-Law No. 33 of 2021) is highly protective of employees, and non-compliance can lead to significant financial penalties and disputes.

9. Employment contracts and visa status. Review standard employment contracts to ensure they comply with the new Labour Law on working hours, leave and termination. Verify the validity of all employee visas and residency permits.

10. End-of-service gratuity (EOSG). Calculate the total accrued EOSG liability for all employees. This is a critical financial liability that must be accurately accounted for in the valuation.

11. Internal policies and disputes. Examine internal HR policies, employee handbooks and any pending or past labour disputes filed with the Ministry of Human Resources and Emiratisation (MOHRE).

Phase IV: Intellectual Property (IP) and Data Protection

In a knowledge-based economy, the protection and ownership of IP are paramount.

12. IP ownership and registration. Verify the target company's ownership of all key IP assets (trademarks, patents, copyrights, domain names). Ensure all registrations are current and properly recorded in the UAE.

13. IP licensing. Review all inbound and outbound IP licences to ensure the target has the right to use the third-party IP it needs, and that its own IP is protected when licensed to others.

14. Data protection and privacy. With the introduction of the Federal Data Protection Law (Federal Decree-Law No. 45 of 2021), LDD must assess the target's compliance with rules on data processing, storage and cross-border transfer, especially for the personal data of UAE residents.

For professional legal guidance, see our due diligence services in Dubai and corporate governance and business compliance advisory service pages.

The Role of Specialised Due Diligence

The core checklist covers the essentials, but some acquisitions require a closer look at specialised areas. This is where a dedicated legal and commercial due diligence team adds the most value.

Commercial Due Diligence (CDD)

Often conducted in parallel with LDD, CDD provides the market context for the legal findings. It assesses the target's market position, competitive landscape, customer base and future growth potential. The legal team's findings on contractual risks, regulatory hurdles and litigation exposure directly inform the commercial valuation.

Combining the legal and commercial findings is key to a successful acquisition. For a comprehensive view of the target's value and risks, specialised commercial due diligence services are highly recommended.

Litigation and Dispute History

15. Litigation review. A thorough review of all pending, threatened or past litigation, arbitration and regulatory investigations is mandatory. This includes reviewing correspondence with regulatory bodies and assessing the potential financial impact of any ongoing disputes.

16. Regulatory fines and penalties. Identify any history of non-compliance that resulted in fines from authorities such as the Securities and Commodities Authority (SCA), the Central Bank or Free Zone regulators.

Post-Acquisition Integration Planning

The LDD process should not end with the signing of the Sale and Purchase Agreement (SPA). Its findings must be used to inform the post-acquisition integration plan.

17. Transition and compliance plan. Identify every step needed to integrate the target company into the buyer's corporate structure, including updating licences, changing UBO filings and aligning HR and compliance policies.

18. Indemnities and warranties. The LDD findings are the foundation for negotiating the warranties and indemnities in the SPA. Specific risks identified (e.g., a potential tax liability or a pending lawsuit) should be covered by specific indemnities from the seller, protecting the buyer after closing.

Conclusion: Securing Your Investment in the UAE

Business acquisitions in the UAE offer considerable potential, but they are inherently complex. The 2025 legal environment, with its new tax regime and enhanced transparency requirements, demands a meticulous and up-to-date legal due diligence process.

By following this checklist, investors can move beyond surface-level checks and uncover the true legal and financial health of the target company. A successful M&A deal in the UAE depends on anticipating and mitigating risks before they materialise.

Do not leave your investment exposed to unforeseen legal pitfalls. Partnering with a law firm that has deep, current knowledge of UAE corporate and M&A law is the single most critical step you can take. For expert guidance through every stage of your acquisition, from initial due diligence to final closing, consider the specialised services offered by Nour Attorneys.

Related Services: Explore our due diligence services in Dubai and the UAE for practical legal support in this area.

Disclaimer: The information provided in this article is for general informational purposes only and does not constitute legal advice. Readers should seek professional legal advice tailored to their specific circumstances before making any decisions or taking any action based on the content of this article.

Nour Attorneys Team

Additional Resources

Explore more of our insights on related topics:

• The Ultimate Due Diligence Checklist for Business Acquisitions in the UAE: A Guide for Strategic Investors
• Investment Due Diligence in the UAE: The Essential Legal Checklist for Global Investors
• Mergers & Acquisitions UAE: Legal Framework & Due Diligence Guide
• Due Diligence in UAE M&A Transactions: A Comprehensive Checklist