What is a Memorandum of Association in Dubai, UAE and how to draft it

What is a Memorandum of Association in Dubai, UAE and how to draft it - Makebiz

The Memorandum of Association is an important legal document when setting up any company in the United Arab Emirates. It acts as a charter that defines the structure and legal identity of the company. It plays a key role in the incorporation process by defining the objectives of the company, the scope of its activities and the responsibilities of its shareholders. The document is drafted according to the clear standards of the UAE regulatory framework.

The purpose of the Memorandum is to reflect the structure of the future organization, the nature of the business, the relationship between the company and its shareholders, and their duties and responsibilities. A clear definition of roles avoids disputes in the future and ensures the smooth running of the company. Being a public document, it is available to verify the legal status and basic structure of the company.

The Memorandum of Understanding is a testament to the best practices applied in the UAE, providing a legal framework to protect the rights of all parties involved in business activities. It is drafted in Arabic and can be translated into other languages to make it accessible and understandable to any responsible party. 

It is important not to confuse the Memorandum of Association (MoA) and the Articles of Association (AoA), as they serve different purposes. The Articles of Association set out the rules for the company’s management and internal operations. If necessary, it can be amended at any time; it acts as a by-law to assist in the day-to-day running of the company. Therefore, in case of contradictions, the provisions of the Memorandum will take precedence over the provisions of the Articles of Association.

Thus, the main provisions of the Memorandum of Association can be emphasized:

  • The name of the company, chosen in accordance with the applicable rules of law;
  • the company’s registered office in the UAE;
  • financial obligations of the shareholders, their responsibilities;
  • specifics of the company’s share capital, including the total number of shares, the value of individual shares, their distribution among shareholders, and protocols for issuing new shares;
  • a precise description of the company’s intended activities to define clear boundaries.

Let’s note the stages of working with the Memorandum of Association:

1. Gathering basic data about the shareholders and the company’s capital structure. 

2. Once a draft has been prepared, all shareholders should review it to ensure that it is consistent with the arrangements. Working together at this stage is useful to identify and resolve any potential disagreements. 

3. Notarization stage. The notary verifies the identity of the shareholders and the authenticity of the information provided. Upon successful verification, a stamp is placed to confirm its status as a legally binding agreement. 

4. The agreement must be registered with the commercial registry of the relevant emirate or the administration of the free economic zone where the company will operate. This step is necessary for the company to obtain a business license and start operating.

The total time for the document to be ready is usually from 1 to 3 working days. It may vary depending on the administration and the complexity of the company structure.

The MoA ensures that the business activity is carried out within the law and provides a clear picture of the company structure and the responsibilities of the shareholders. To properly draft the text of the MoA and ensure its approval, it is advisable to collaborate with lawyers in this field. Makebiz specialists will accompany you at all stages of business registration, ensuring a successful start of your business in the UAE. Sign up for a free consultation and find out more about what a memorandum of association in Dubai is and how to draw it up.

Read other articles on this topic:

Back