M&A Regulatory Approvals in UAE: SCA and Competition Authority

M&A Regulatory Approvals in UAE: SCA and Competition Authority

Ask a buyer who has to say yes to their UAE acquisition and the answer usually names one body. If the target is listed, the Securities and Commodities Authority. If it is not, some general sense that a ministry somewhere signs off. The belief underneath is that clearance is a single decision, taken in one place, after which the deal is free to close. Almost every timetable that slips in this market slips because that belief was built into it.

Three separate decisions sit between signing and closing, and they belong to three different sets of people. The SCA decides questions of shareholder protection and market disclosure, and only where a public joint-stock or listed company is on one side of the transaction. Merger control under Competition Law No. 4 of 2012 is a different decision entirely, taken by the Competition Authority, and it does not care whether anyone involved is listed — it cares about turnover and market share. Sector regulators decide a third question: whether the person who will own the licence after closing is someone they are willing to license. The Central Bank asks that about a bank; the Ministry of Health and Prevention and the Dubai Health Authority about a hospital; the Telecommunications and Digital Government Regulatory Authority about a network operator.

None of these bodies defers to the others. A competition clearance does not persuade the Central Bank, and a Central Bank approval does not shorten a competition review. So the regulator people believe decides — the SCA, because it is the one with a public profile and a market announcement attached to it — is frequently not the regulator that sets the closing date. In a private deal for a licensed business the SCA has no role at all, and the date the parties actually close is the date a sector regulator finishes looking at the acquirer. Building a timetable on the wrong assumption is what produces long-stop dates that expire and financing commitments that lapse.

Related Services: Explore our regulatory approvals work and our M&A due diligence services for practical legal support in this area.

The SCA: what it reviews, and what it does not

The SCA's jurisdiction over M&A is defined by the status of the companies involved, not by the size of the deal. Where a public joint-stock company or an entity listed on a UAE financial market is party to a merger, or to a transfer of control or of a significant shareholding, the transaction needs the Authority's prior approval. Where it is not, the SCA is simply not in the picture, and a good deal of anxiety about "securities approval" in private transactions is misplaced.

What the Authority protects is narrow and consistent: the position of minority shareholders, and the equality of information in the market. Those two concerns explain nearly every requirement it imposes. Disclosure rules exist so that no shareholder or trader learns of the transaction ahead of the rest; valuation requirements exist so that minorities are not asked to vote on a price no independent party has tested; governance disclosure exists so that shareholders can see who will control the company afterwards, and on what terms.

The three documents the Authority expects to see

A submission to the SCA is built around three items, and one missing any of them will not survive first contact.

1. The merger plan. The substantive description of the transaction — what is being combined, on what terms, and what the resulting company looks like.
2. An independent fairness opinion. A valuation of the entities involved, prepared by someone independent of the parties, transparent in method and consistent with internationally accepted accounting principles. Its function is to give shareholders a price view that does not come from the people proposing the deal.
3. Shareholder circulars, with evidence of shareholder consent. The circular sets out the rationale for the merger, its financial implications and its strategic objectives, and it must disclose conflicts of interest, related-party transactions, and any change in corporate governance following completion.

These are not filing formalities. The fairness opinion and the circular are the documents read most closely, because they are where a transaction's problems become visible: a valuation from an adviser who also earns a success fee on closing, a related-party arrangement described in a single line, a governance section that does not say who chairs the combined board. Each of those produces a request for further information rather than an approval.

Where the review slows down

The SCA's role is not purely administrative. It can attach conditions to an approval and it can refuse a proposal that does not meet its standards, which makes the review substantive rather than a stamping exercise. In practice, the mechanism that consumes time is the request for additional information. Every such request stops the parties' own clock, because the answer has to be prepared, agreed between two sets of advisers, and sometimes put back to shareholders.

Those requests cluster in predictable places: conflicts of interest involving major shareholders on the acquiring side, related-party transactions disclosed thinly, and post-completion governance that leaves minority shareholders without protection built into the constitution. Answering them in the first submission removes the most common cause of a second round.

An illustration

Take a listed UAE company proposing to merge with a regional competitor. The merger plan goes in with independent valuation reports and evidence of shareholder consent. During the review the Authority identifies a conflict of interest involving major shareholders on the acquiring side, and asks for further disclosure and for changes to the plan addressing governance.

The parties answer structurally rather than rhetorically: independent directors on the combined board, a compliance committee with a defined remit, and full disclosure of the related-party position. The point is not the particular remedy. It is that the concern was about shareholders who could not negotiate for themselves, and what met it was a change to the company's structure rather than an argument that the concern was overstated.

For support in preparing and running submissions of this kind, Nour Attorneys offers mergers and acquisitions services tailored to the UAE regulatory environment.

Competition clearance is a separate decision

Competition Law No. 4 of 2012, as amended, sets up merger control as a free-standing regime. It applies to private and listed parties alike, and it asks a question no other regulator asks: whether the combination creates or strengthens a dominant position capable of harming competition in the relevant market. A deal can be entirely clean from a shareholder-protection standpoint and still be the deal the Competition Authority stops.

The two thresholds

Notification is mandatory when either of two thresholds is crossed. The first is turnover: combined turnover of the merging entities in the UAE market exceeding AED 200 million. The second is market share: the merged entity holding at least 40% of the relevant market. Either one on its own is enough. The thresholds are drawn to catch transactions with a material effect on competition while leaving smaller deals outside the regime.

Turnover is the easier test to apply, because it is a number the parties already have. Market share is the one that generates argument, because it depends on how the relevant market is defined, and market definition is contested ground in every competition system. A combination that looks like a quarter of a broadly drawn national market can look like a majority of a narrowly drawn regional or product-specific one. Parties who assume the broad definition and file nothing are taking the Authority's view of the market on trust without having asked for it.

Thirty days, then possibly ninety more

Once a transaction is notified, the Authority has 30 calendar days for a first look. If that first look raises concerns about dominance or adverse effects on competition, it can open a second-phase investigation running up to a further 90 calendar days, during which the parties are expected to supply market data, competitive analysis, and any remedies they propose.

Competition review therefore has two possible shapes, and a transaction timetable has to survive both. Where the parties overlap meaningfully, the prudent assumption is the longer path, with the shorter one treated as upside.

Remedies: structural and behavioural

Where the Authority has concerns, the transaction is not necessarily lost. Two families of remedy are available, and they are not equivalent.

Structural remedies change what the merged entity owns. Divesting an overlapping business unit, a facility or a licence to a third party removes the overlap that caused the concern. They are hard to negotiate, because they take value out of the deal, but once completed they are finished — there is nothing left to monitor.

Behavioural commitments change what the merged entity does: non-exclusivity obligations, pricing restraints, open access to infrastructure. They preserve the deal's perimeter, but they bind the business for as long as they run and they need drafting precise enough to be enforced and monitored. A commitment written loosely enough to be accepted easily is often written loosely enough to be argued about later.

A worked illustration in telecoms

Suppose two telecommunications providers, each with a substantial retail base, propose to merge. On the market definition the Authority prefers, the combined business would hold roughly 60% of the relevant market. The concern is straightforward: fewer competitors, less consumer choice, and the pricing power that follows.

The parties open with behavioural commitments — a cap on price increases, guaranteed network access for competitors — and the Authority is not satisfied, because those commitments are worth only as much as the supervision behind them. It asks instead for divestiture of certain spectrum licences and retail outlets to a third party. The parties accept, and clearance follows within the second-phase period. The lesson generalises: where the concern is about the shape of the market, an undertaking to behave well inside a market that stays concentrated tends not to answer it.

Failure to notify, or to obtain clearance where clearance was required, can lead to fines and to the unwinding of a transaction that has already completed. That is why the notification question belongs in diligence rather than at closing — it has to be answered before the parties commit to a timetable.

Nour Attorneys' work in corporate law and due diligence is built around identifying these triggers early, while the structure can still respond to them.

The sector regulators, and why they often control the calendar

Beyond the SCA and the Competition Authority sit the regulators who license the business itself. Their question is not about shareholders or market structure. It is whether the incoming owner is acceptable to them, and whether the service the licence covers will still be delivered properly once ownership changes. In licensed industries this is frequently the longest limb of the approval process and the one that fixes the closing date.

Financial services: the Central Bank and the DFSA

Mergers involving banks, insurers and financial service providers attract close review from the Central Bank of the UAE, directed at systemic stability, capital adequacy and customer protection. An acquisition of control in a licensed bank requires approval, and the review looks past the transaction to the acquirer itself: its financial strength, its governance structure, its strategic plans for the business. An acquirer who cannot satisfy those criteria faces rejection, or an approval conditioned on restructuring.

Entities operating within the Dubai International Financial Centre answer instead to the Dubai Financial Services Authority, under its own regime, which includes fit-and-proper testing of acquirers and stress testing directed at whether the post-merger entity remains financially resilient. A group with businesses on both sides of the DIFC boundary deals with both.

Healthcare: federal and emirate-level licensing

Healthcare is regulated at both federal and emirate level — the Ministry of Health and Prevention alongside authorities such as the Dubai Health Authority. Transactions involving hospitals, clinics or pharmaceutical businesses have to satisfy licensing, service quality and operational requirements written to protect public health rather than shareholders.

Conditions here tend to be about continuity. A regulator may require that particular specialties continue to be offered, that key personnel are retained, or that services in underserved areas are maintained. Timelines can also run longer than elsewhere, because technical assessment and public interest consultation take time that no amount of transactional urgency compresses.

Telecommunications: the TDRA

In telecommunications, the Telecommunications and Digital Government Regulatory Authority reviews mergers with a view to preserving competition and service quality, examining what a proposed combination does to infrastructure and to consumer choice. Given the sector's strategic weight, conditions can reach into network sharing, spectrum usage and quality-of-service standards, and where the TDRA sees concentration or a risk of service degradation its review becomes genuinely contested rather than procedural.

Running them in parallel

A single banking transaction can require parallel submissions to the SCA, the Central Bank and the Competition Authority, each with its own procedural requirements and its own clock. The failure mode is not usually refusal. It is desynchronisation — one approval arriving with conditions that sit awkwardly against another, or approvals arriving months apart.

The answer is a regulatory map drawn at the start of the transaction rather than assembled as filings fall due: which bodies have jurisdiction, what each needs, how long each realistically takes, and which submissions share underlying material, so that the same facts are described consistently everywhere. Inconsistency between filings is itself a source of questions.

For support in these areas, Nour Attorneys provides focused work in corporate restructuring and contract drafting shaped around sector-specific requirements.

Sequencing the approvals

Clearance is won or lost in decisions taken well before anything is filed. Five of them matter most.

Diligence that looks for triggers, not just liabilities

Regulatory diligence asks a different question from ordinary legal diligence: not only what liabilities the target carries, but what about the target and the acquirer together will bring a regulator into the transaction. That means examining ownership structures, contractual arrangements, previous regulatory findings and market position — the last of these because market position, not deal value, determines whether a competition notification is required. Done early, the work leaves room to act on what it finds: a shareholding restructured, a conflicting contract terminated, an overlap addressed by adjusting the perimeter of what is being bought. Done late, the same findings arrive as problems rather than choices.

Talking to regulators before filing

Pre-notification contact and informal consultation are worth the effort they take. A discussion with the Competition Authority before filing gives the parties a realistic sense of whether a second-phase investigation is likely and what documentation will be expected. A preliminary conversation with the SCA can clarify disclosure expectations and procedural detail that would otherwise surface as a request for further information after submission.

Designing remedies before you need them

Parties who have thought about remedies in advance negotiate from a better position than parties improvising under a deadline. Deciding early which overlaps could be divested, and at what cost, means a considered answer is available when a concern is raised. Remedies also have to be drafted for enforceability and monitoring — a commitment that cannot be measured cannot be complied with, and post-approval disputes generally begin in vague drafting.

Drafting the deal around the approvals

The transaction documents have to reflect what the regulatory analysis found. Conditions precedent should name the approvals actually required. Long-stop dates should be set against realistic review periods, including the possibility of a second phase, rather than against the best case. Termination rights and price adjustment mechanics should say what happens if clearance is delayed or refused, so that the answer is contractual rather than a renegotiation. Integration planning should stay flexible enough to absorb conditions that arrive attached to an approval.

What happens after clearance

Approval is rarely the end of the obligation. Clearances come with reporting requirements, compliance audits and operational restrictions that continue after completion, and behavioural commitments in particular have to be lived with. Non-compliance can bring penalties, reputational damage, and in serious cases the unwinding of the transaction. Monitoring and internal controls belong in the integration plan alongside the commercial workstreams, not in a file opened once a year.

Nour Attorneys combines this regulatory sequencing with transactional execution through its mergers and acquisitions practice.

Conclusion

The regulator people expect to decide their UAE transaction is often not the one that does. The SCA decides a question about shareholders and disclosure, and only where a listed or public joint-stock company is involved. The Competition Authority decides an independent question about market structure, triggered by combined UAE turnover above AED 200 million or a merged market share of at least 40%, on a clock of 30 days and potentially 90 more. Sector regulators decide whether they will license the new owner at all, and in licensed industries theirs is usually the decision the closing date waits on.

Treating those as three decisions rather than one changes what diligence looks for, when regulators are first approached, what remedies exist before they are demanded, and how conditions precedent and long-stop dates are drafted. The parties who close on schedule are rarely the ones who moved fastest; they are the ones who knew at the outset who would be deciding what.

Disclaimer: This article is for informational purposes only and does not constitute legal advice.

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Contact Nour Attorneys

If you are planning an acquisition that may touch any of these regimes, the useful conversation happens before the timetable is fixed. Contact Nour Attorneys to discuss which approvals your transaction needs and how long they are likely to take. Our mergers and acquisitions in Dubai page sets out how we work.

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