Finance Lawyer Dubai: When to Engage for Corporate Transactions

A finance lawyer in Dubai advises on loan agreements, restructuring, securities offerings, M&A and escrow structures under the UAE Commercial Companies Law (Federal Decree-Law No. 32 of 2021), the UAE Civil Transactions Law (Federal Decree-Law No. 5 of 1985) and, where applicable, DIFC Law No. 1 of 2004 and ADGM Regulations 2015. The advice applies to mainland, DIFC and ADGM jurisdictions.

Related Services: Explore our Drafting Contracts & Agreements and Financing & Refinancing Consultation Services services for practical legal support in this area.

WHEN DRAFTING OR REVIEWING A LOAN AGREEMENT, WHAT DOES A FINANCE LAWYER DO?

A finance lawyer reviews loan contracts to ensure they comply with the UAE Commercial Companies Law and the UAE Central Bank's lending regulations, confirms that interest rates, security packages and covenants are enforceable, and advises on governing law and jurisdiction clauses. The lawyer verifies that borrower representations, warranties and indemnities reflect the parties' risk allocation and that any guarantees meet the requirements of Federal Decree-Law No. 18 of 2017 on Commercial Transactions.

Under the UAE Commercial Companies Law, a loan agreement must contain clear terms on principal, repayment schedule and events of default (Article 89). The lawyer checks that security interests-such as mortgages over real estate or pledges over shares-are perfected according to Federal Decree-Law No. 20 of 2016 on Mortgages and Federal Decree-Law No. 5 of 1985 on Civil Transactions, which require registration with the relevant land department or securities authority. If the loan involves foreign currency, the lawyer confirms compliance with the UAE Central Bank's Regulation No. (1) of 2019 on Foreign Exchange Exposure. The lawyer also advises on dispute resolution mechanisms, recommending arbitration under the UAE Federal Arbitration Law (Federal Decree-Law No. 6 of 2018) or court litigation in the relevant emirate, and outlines the documentation needed for enforcement, including the original loan deed, security documents and any board resolutions.

HOW DOES A FINANCE LAWYER ASSIST IN CORPORATE RESTRUCTURING OR DEBT REFINANCING?

A finance lawyer structures debt-for-equity swaps, novations and scheme-of-arrangement plans to achieve financial rehabilitation while respecting creditor rights under the UAE Bankruptcy Law (Federal Decree-Law No. 9 of 2016). The lawyer prepares the restructuring proposal, coordinates with secured and unsecured creditors, and ensures that any court-sanctioned scheme complies with procedural timelines and disclosure obligations.

The UAE Bankruptcy Law requires a debtor to file a restructuring plan with the competent court within 30 days of declaring insolvency (Article 13). The lawyer drafts the plan, which must include a feasibility study, a schedule of payments and a comparison of outcomes for creditors versus liquidation (Article 15). The lawyer also advises on the stay of proceedings that automatically halts creditor actions upon filing (Article 12) and on the requirements for creditor meetings, voting thresholds and court approval (Articles 16-18). For debt refinancing, the lawyer reviews new loan facilities to ensure they do not constitute preferential treatment prohibited by Article 22 of the Bankruptcy Law and confirms that any new security interests are registered and rank appropriately. The lawyer further advises on tax implications under Federal Decree-Law No. 7 of 2017 on Tax Procedures and on any required notifications to the UAE Ministry of Economy.

WHAT ROLE DOES A FINANCE LAWYER PLAY IN SECURITIES OFFERINGS AND COMPLIANCE?

A finance lawyer prepares prospectuses, private placement memoranda and underwriting agreements for equity or debt offerings, ensuring adherence to the UAE Securities and Commodities Authority (SCA) Regulations, the DIFC Markets Law (DIFC Law No. 1 of 2004) or the ADGM Securities Regulations, as applicable. The lawyer conducts due diligence on issuer disclosures, verifies that offering documents contain all material facts, and advises on listing requirements with the Dubai Financial Market (DFM) or NASDAQ Dubai.

Under SCA Board Decision No. (3/R.M) of 2017 on Public Offerings, a prospectus must contain audited financial statements for the preceding two years, a description of risks, and details of the use of proceeds (Article 4). The lawyer confirms that the issuer's corporate governance complies with the UAE Commercial Companies Law's provisions on related-party transactions (Article 164) and that any lock-up periods for insiders are disclosed. For debt securities, the lawyer ensures compliance with the SCA's Debt Securities Regulations, which require a rating from an approved agency and a clear statement of covenants (Article 7). In the DIFC, the lawyer follows the DIFC Markets Law's Part 5 on Prospectus Approval, which mandates submission to the DFSA at least 15 business days before publication (Section 5.2). The lawyer also advises on ongoing reporting obligations, such as quarterly financial statements and material event notifications under the SCA's Continuous Disclosure Requirements.

WHEN SHOULD A FINANCE LAWYER BE INVOLVED IN MERGERS AND ACQUISITIONS OR JOINT VENTURES?

A finance lawyer conducts legal due diligence, drafts share purchase agreements, shareholders' agreements and joint venture contracts, and advises on regulatory approvals from the UAE Competition Authority, the SCA or sector-specific regulators. The lawyer structures the transaction to achieve tax efficiency, allocates risk through indemnities and warranties, and ensures compliance with foreign ownership restrictions under the UAE Commercial Companies Law.

The UAE Commercial Companies Law requires that any acquisition exceeding 25 % of a mainland company's share capital obtain prior approval from the Ministry of Economy if the acquirer is a foreign entity (Article 19). The lawyer prepares the notification package, including the draft agreement, financial statements and a description of the anticipated economic impact. For joint ventures, the lawyer ensures that the joint venture agreement complies with the UAE Civil Transactions Law's provisions on partnership contracts (Articles 679-695) and, if the venture is located in a free zone, adheres to the relevant free zone authority's regulations, such as the Dubai Multi Commodities Centre (DMCC) Company Regulations. The lawyer also advises on antitrust considerations, confirming that the transaction does not create a dominant position prohibited by Federal Decree-Law No. 4 of 2012 on Competition Regulation (Article 5). Post-completion, the lawyer assists with share transfer registration at the relevant commercial registry and with the filing of any required amendments to the company's memorandum and articles of association.

WHAT SUPPORT DOES A FINANCE LAWYER PROVIDE FOR ESCROW ARRANGEMENTS AND GUARANTEES?

A finance lawyer drafts escrow agreements that clearly define the conditions for release of funds, appoints a neutral escrow agent-often a bank or licensed trust company-and ensures that the agreement complies with the UAE Civil Transactions Law's provisions on trust and deposit contracts (Articles 901-910). The lawyer also prepares guarantee instruments, such as performance bonds or parent company guarantees, verifying that they meet the requirements of Federal Decree-Law No. 18 of 2017 on Commercial Transactions and are enforceable under UAE courts.

Under the UAE Civil Transactions Law, an escrow arrangement is valid only if the parties expressly agree on the triggering events, the escrow agent's duties and the timeline for fund release (Article 902). The lawyer includes provisions for audit rights, dispute resolution and the agent's liability for negligence. For such obligations, the lawyer confirms that the guarantor's obligation is secondary to the principal debtor's liability and that the obligation document contains a clear statement of the obligation amount, duration and any limitation clauses (Article 913). The lawyer also advises on the registration of security interests backing such obligations, such as pledges over shares or mortgages over property, to perfect the guarantor's right of recourse under Federal Decree-Law No. 20 of 2016 on Mortgages. In cross-border transactions, the lawyer checks that the escrow agreement selects a jurisdiction with recognized enforcement mechanisms, such as the DIFC Courts or ADGM Courts, and that any foreign judgment can be executed in the UAE under the UAE Federal Arbitration Law and the New York Convention.

FREQUENTLY ASKED QUESTIONS

What law governs loan agreements entered into by a Dubai-based company?
Loan agreements are principally governed by the UAE Commercial Companies Law (Federal Decree-Law No. 32 of 2021) for corporate capacity and authority, and the UAE Civil Transactions Law (Federal Decree-Law No. 5 of 1985) for contract formation, interest and security interests. If the loan involves a DIFC or ADGM entity, the DIFC Markets Law (DIFC Law No. 1 of 2004) or ADGM Regulations 2015 apply respectively. The Arabic text of UAE legislation as published in the Official Gazette prevails over any translation.

How long does a creditor have to enforce a security interest after a default?
Under Federal Decree-Law No. 20 of 2016 on Mortgages, a mortgagee must initiate enforcement proceedings within three years from the date of default, unless the mortgage agreement specifies a shorter period (Article 12). For pledges over shares under Federal Decree-Law No. 18 of 2017 on Commercial Transactions, the pledgee may enforce the pledge after giving the pledgor a notice period of at least 30 days, followed by a court order if the pledgor does not remedy the default (Article 15).

What disclosure must a company make when issuing bonds in the UAE?
A company issuing bonds must prepare a prospectus that includes audited financial statements for the two preceding fiscal years, a description of the use of proceeds, risk factors, details of the bond's terms and conditions, and any guarantees or security provided (SCA Board Decision No. (3/R.M) of 2017 on Public Offerings, Article 4). The prospectus must be filed with the Securities and Commodities Authority for approval prior to any public offer or advertisement.

Can a foreign entity act as guarantor for a UAE loan without a local sponsor?
Yes, a foreign entity may provide a guarantee for a UAE loan; however, the guarantee must be executed in accordance with the UAE Civil Transactions Law, and if the guarantor wishes to enforce any security interest in UAE-based assets, the guarantor may need to register a power of attorney with the relevant UAE authority. Such an obligation itself does not require a local sponsor, but any underlying loan facility may be subject to foreign ownership limits under the UAE Commercial Companies Law (Article 19).

What are the consequences of providing false information in a loan application?
Providing false or misleading information in a loan application constitutes fraud under Federal Decree-Law No. 31 of 2021 on the Issuance of the Commercial Transactions Law (Article 9) and may attract criminal penalties, including imprisonment of up to two years and a fine, as well as civil liability for damages suffered by the lender. The lender may also rescind the loan agreement and claim restitution of any disbursed funds under the UAE Civil Transactions Law (Article 185).

Is it mandatory to use an escrow agent for share purchase agreements in Dubai?
While not mandatory by law, using a licensed escrow agent is a common practice to mitigate risk, especially in cross-border transactions. The escrow arrangement must comply with the UAE Civil Transactions Law's provisions on trust contracts (Articles 901-910) and the parties should expressly appoint the agent, define the release conditions and agree on the agent's fees and liabilities.

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