Board resolution for transfer of shares
In the UAE, the board resolution for transfer of shares is a crucial corporate governance document required by law when transferring company shares between parties. This resolution is mandatory for mainland and free zone companies in the UAE and must comply with the Federal Commercial Companies Law.
Board resolution for transfer of shares
The board resolution for transfer of shares includes the following sections:
- Letterhead and Company Details: The full legal name of the company, trade license number, and registered office address.
- Date and Time: The date, time, and place of the board meeting.
- Attendance: A list of board members present and absent, and confirmation of a quorum.
- Chairperson: The identity and authority of the chairperson of the meeting.
- Purpose: A statement of the specific purpose of the meeting regarding the share transfer.
- Transfer Details: Specific details of the proposed share transfer, including the number of shares, the parties involved (transferor and transferee), and the consideration (financial consideration).
- Board Considerations: The key factors the board considered in making its decision.
- Resolution: The formal wording of the resolution approved by the board.
- Executing Authority: Authorizing specific individuals to implement the transfer.
- Closing: The formal closing of the meeting and signature requirements.
Read more: Board Resolution For Opening Bank Account Services UAE
Drafting Board resolution for transfer of shares
Regarding the approval of the transfer of share ownership
The Board of Directors of [Company Full Name], a [state company type, e.g., Limited Liability/Special Joint Stock Company], registered in [state emirate/city, e.g., Dubai], United Arab Emirates, under commercial license number [insert license number], and with its registered address at [insert company full address],
Having reviewed:
The Company’s Articles of Association.
The application for share ownership transfer submitted by [Seller’s Full Name], in its capacity as the seller, and [Buyer’s Full Name], in its capacity as the buyer.
[Add any other relevant documents or laws reviewed, e.g., the provisions of the UAE Commercial Companies Law No. 32 of 2021 and its amendments].
Whereas:
Mr./Mrs. [Seller’s Full Name] is the registered owner of [number] of shares of the Company, with a nominal value of [insert nominal value per share] AED per share.
Mr./Ms. [full name of purchaser] has expressed his/her desire to purchase the above-mentioned shares.
The parties have agreed to transfer ownership of the shares according to the agreed terms.
Therefore, the Board of Directors has resolved as follows:
Approval of Transfer of Ownership: Approval of the transfer of ownership of [number] shares of the Company’s shares from Mr./Ms. [full name of seller] (the seller) to Mr./Ms. [full name of purchaser] (the purchaser).
Registration of Purchaser: Registration of Mr./Ms. [full name of purchaser] as the new owner of the above-mentioned shares in the Company’s shareholders’ register effective from the date of this resolution.
Issuance of Share Certificates: Authorizing the Company’s competent management to cancel the Seller’s original share certificates, issue new share certificates in the Buyer’s name, or amend the share registers, as appropriate.
Amendment of Company Records: Directing the Company Secretary or his/her representative to update the shareholders’ registers and all official records and documents of the Company to reflect this share transfer.
Effectiveness of Resolution: This resolution shall be effective from the date of its issuance.
This resolution was issued on [enter date, month, and year] corresponding to [enter Hijri date, if applicable]
in [enter name of emirate, e.g., Dubai], United Arab Emirates.
Signatures of Board Members:
Full Name: Signature
[Name of Member 1]
[Name of Member 2]
[Name of Member 3]
Resolution for transfer of shares in special company
The decision to transfer shares in a special company in the UAE is an important step that requires adherence to specific legal and administrative procedures to ensure the validity and integrity of the transaction. The procedures differ slightly depending on whether the company operates in the mainland (Mainland) or a free zone. The following outlines the board resolution for transfer of shares in UAE:
- Reviewing the Memorandum of Association and Shareholders’ Agreement: You should begin by reviewing the company’s Articles of Association (MOA) and any shareholders’ agreements to determine any conditions or restrictions on the transfer of shares, such as preemption rights for existing shareholders or board or shareholder approval requirements.
- Preparing the Share Transfer Agreement (STA): This is a key legal document that outlines the details of the transfer process.
- Shareholder Approval: In many special companies, especially limited liability companies (LLCs), the transfer of shares may require written approval from existing shareholders.
- Board Approval: Special companies often require board approval for the transfer of shares.
- Local Sponsor No-Objection Certificate (NOC) (if applicable): In mainland companies that require a local sponsor, a local sponsor may need to obtain a no-objection certificate (NOC).
- Updating the Memorandum of Association (MOA): The company’s Memorandum of Association (MOA) must be amended to reflect the new ownership structure.
Documents required for transferring shares in a special company in the UAE:
- A notarized share transfer agreement.
- An updated MOA.
- Copies of passports and Emirates ID cards for new and existing shareholders.
- A no-objection certificate from the local sponsor (if applicable).
- Proof of payment or transfer consideration.
- A board of directors or shareholders’ resolution approving the transfer.
- For corporate shareholders, documents such as the company’s certificate of incorporation, MOA, board resolution approving the acquisition, and others may be required.
Board resolution for transfer of shares in the UAE is a structured process that requires preparing legal documents, obtaining internal and external approvals, and registering the change with the relevant government authorities.
Read more: Board Resolution Attestation in UAE – Trusted Services
Sample board resolution for transfer of shares
Board resolution for transfer of shares is an important document that records the board’s approval of a change in the ownership of a company’s shares. The form and content of this resolution vary slightly depending on the type of company (special, public joint-stock, etc.) and the company’s bylaws. Therefore, the following paragraphs explain the basic elements of the Board Resolution for Transfer of Shares form:
[Company Name]
Board Resolution No.: [Resolution Number]
Date: [Meeting Date – Day/Month/Year]
Meeting Place: [Meeting Place]
Subject: Approval of Share Transfer
Based on the Board of Directors meeting held on [Meeting Date] at [Meeting Place], and attended by the following Board members:
[Name of Member 1] – [Position]
[Name of Member 2] – [Position]
[Name of Member 3] – [Position]
After reviewing the share transfer request submitted by [Name of Seller/Transferor of Shares] to [Name of Buyer/Transferee of Shares], and reviewing all relevant documents and papers, and after deliberation and discussion, the Board has decided the following:
First: Approval of Share Transfer
Unanimous/Majority Approval (select as applicable) for the transfer of share ownership Number of shares transferred: [number of shares in numbers and letters] shares of the company’s shares, from Mr./Ms./Company [Name of seller/transferor of shares] (first party), holder of ID/commercial license number [ID/commercial license number of seller], to Mr./Ms./Company [Name of buyer/transferor of shares] (second party), holder of ID/commercial license number [ID/commercial license number of buyer].
Second: Details of the shares transferred
Number of shares: [Number of shares] shares.
Nominal value per share: [Nominal value] UAE dirhams.
Total nominal value of the shares transferred: [Total nominal value] UAE dirhams.
Share Certificate Number(s) (if applicable): [Certificate Numbers]
Percentage of Shares Transferred of the Company’s Total Shares: [Percentage]%
Third: Registration of Transfer of Ownership
Instruct the company’s management, legal secretary, and/or legal advisor to take all necessary measures to register this transfer of ownership in the company’s official records, including the shareholders’ register, and update relevant data with the relevant government entities in the United Arab Emirates (such as the Ministry of Economy, the Department of Economic Development, the stock market if the company is listed, etc.), in accordance with applicable laws and regulations.
Fourth: Amendment of the Articles of Association (if necessary)
If the transfer of ownership requires any amendment to the company’s articles of association (such as changing a significant percentage of ownership or exceeding the permissible shareholding limits), the Chairman of the Board of Directors/General Manager (select as applicable) is authorized to take the necessary measures to submit the amendment request to the relevant authorities.
Fifth: Effectiveness of the Resolution
This resolution is effective from the date of its issuance.
Sixth: Signatures
This document shall be approved and signed by the Chairman and members of the Board of Directors present at the meeting:
Name: Signature
[Name of Chairman of the Board of Directors]
[Name of Board Member 1]
[Name of Board Member 2]
Minutes for transfer of shares
The minutes of board resolution for transfer of shares meeting in the UAE must include the following information:
Basic company information:
Full legal name of the company.
Trade license number.
Registered office address.
Company type (e.g., limited liability company).
Meeting details:
Date, time, and venue.
Meeting type (e.g., board meeting or general assembly meeting).
Attendance and quorum:
A list of the names of the board members or shareholders present and absent.
Confirmation of the meeting quorum according to the company’s articles of association or bylaws.
Name of the chairperson of the meeting and confirmation of their powers.
Purpose of the meeting:
A clear statement of the purpose of the meeting, which is to approve the share transfer.
Share transfer details:
The specific number of shares to be transferred.
Names of the parties involved (seller and buyer) and their full details (name, nationality, Emirates ID/passport number, address).
Agreed value of the shares (sale price and payment terms).
Effective date of the transfer.
Board/Shareholder Considerations:
Any key factors considered by the board or shareholders when making the decision (e.g., valuation reports, due diligence reports).
Formal Resolution (Resolution):
The formal wording of the resolution approved by the board or shareholders, stating the approval and details of the share transfer.
Power of Execution:
Authorization of the authorized persons to execute the transfer, including the signing of the necessary documents and certificates.
Closing and Signatures:
Formal closing of the meeting.
Signatures of the board members or shareholders present.
Read more: Drafting Board Resolution for Winding up of Company UAE
Documents Required for Share Transfer
- Share Transfer Agreement (STA): This is a key document that sets out all the terms and conditions of the transfer of ownership between the seller and buyer. It must be notarized by a notary public.
- Copy of the Memorandum of Association (MOA): This may need to be updated to reflect the new ownership structure.
- Copies of passports and Emirates ID cards for new and existing shareholders.
- A No Objection Certificate (NOC) from the local sponsor (if the company requires a local sponsor).
- Proof of payment or consideration for the transfer.
- Updated commercial registration reflecting changes in ownership.
- Updated share certificates for new shareholders.
- Updated Ultimate Beneficial Owner Declaration (UBO Declaration) forms.
Benefits of POA&more in regulating the board resolution for transfer of shares
POA&more POA Dubai is a valuable partner in organizing the board resolution for transfer of shares in the UAE, thanks to its expertise in documenting legal documents and facilitating the process. Here are the key benefits it offers:
Specialized Legal Expertise:
- Precise Drafting of Powers of Attorney: POA&more has experience drafting Company Share Transfer POAs that are accurate and compliant with UAE laws, ensuring their legal validity and avoiding costly errors.
- In-depth Understanding of the Laws: It has in-depth knowledge of the UAE Companies Law (Federal Decree Law No. 32 of 2021 on Commercial Companies) and relevant share transfer regulations, ensuring full compliance with legal requirements.
- Board Resolution Requirements: It assists in preparing and drafting the board resolutions required for share transfers, which must include specific details such as the number of shares, the parties involved, and any conditions that must be met.
Simplification and Facilitation of Procedures:
- Dealing with Complex Procedures: The company handles all complex paperwork and legal formalities related to share transfers, saving the parties involved time and effort.
- Notarization and Certification: Facilitating the process of notarizing documents with a notary public and relevant government authorities, ensuring legal recognition of the power of attorney and decisions.
- Global Access: For international shareholders, POA&more can appoint a UAE-based representative through a power of attorney to handle all matters related to the share transfer without the need for the shareholder’s physical presence.
Legal Compliance and Transparency:
- Ensuring Compliance: Ensuring that all steps and procedures related to the share transfer comply with UAE laws and regulations, reducing the risk of legal disputes or future issues.
- Protecting Parties’ Rights: Through correct legal attestation and transparent procedures, we help protect the rights and interests of all parties involved in the share transfer process (seller, buyer, and company).
- Updating Records: Ensuring that company records and relevant authorities are properly updated to reflect the change in share ownership.
Efficiency and Effectiveness:
- Swift Implementation: Thanks to its expertise and network, POA&more can expedite the share transfer process, reducing the time it takes to complete the transaction.
- Reducing Administrative Burden: It reduces the administrative burden on boards of directors and shareholders, allowing them to focus on their core activities.
- Advice: We can advise on best practices and requirements for the share transfer process.
POA&more offers a comprehensive solution to help streamline the board resolution for transfer of shares in the UAE, providing efficiency, legal compliance, and streamlined procedures for all parties involved.
Sources
FAQ
Does transfer of shares require Board Resolution?
Yes, the transfer of shares in many companies requires board resolution for transfer of shares. This is due to several reasons:
- Ensuring compliance with laws and regulations: Corporate laws and bylaws in many countries require board approval for the transfer of ownership to ensure compliance with legal and accounting procedures.
- Maintaining corporate records: The board of directors is responsible for maintaining accurate shareholder records, and the transfer of shares requires updating these records.
- Protecting the interests of the company and shareholders: There may be restrictions on the transfer of shares stipulated in the company’s articles of association (such as the right of preemption for existing shareholders), and the board of directors ensures that these restrictions are enforced.
- Evaluating the new buyer: In some cases, especially in special or closed companies, the board of directors may wish to evaluate the new buyer to ensure their compatibility with the company’s values or the absence of a conflict of interest.
- Tax issues: The transfer of shares may have tax implications, and the board of directors ensures that these matters are properly addressed.
- Issuing new share certificates: After approving the transfer, the board of directors oversees the issuance of new share certificates to the new owner and the cancellation of old ones.
What resolution is needed to transfer shares?
Board resolution for transfer of shares, or the procedure necessary to transfer share ownership, is a process that involves a set of legal and administrative steps and required documents to ensure the new ownership is properly registered in accordance with the country’s applicable laws and regulations and the company’s own bylaws. It is always advisable to use POA&more, as they specialize in ensuring the process is completed properly.
What is a director’s resolution for share transfer?
In the UAE, the directors’ (or board of directors’) resolution plays a pivotal role in the process of transferring share ownership in companies, especially limited liability companies and special joint stock companies. This resolution aims to ensure compliance with the laws and regulations governing share transfers and protect the interests of the company and shareholders.
The “Board resolution for transfer of shares” is a fundamental and vital document in corporate governance in the UAE. It is required by UAE law for all companies, whether based in the mainland or free zones. This resolution is typically prepared following a formal board meeting at which the approval of the proposed share transfer is discussed.
What is the resolution for change in shareholding?
The decision to change share ownership in the UAE is a structured process aimed at ensuring transparency and protecting the rights of all stakeholders. This process requires compliance with specific procedures and conditions that vary slightly depending on whether the company is listed on the financial markets or not, and whether it is located in a free zone or mainland.
