How do I protect myself as a foreign shareholder in the UAE?

To protect their minority interests, it is advisable for foreign shareholders of LLCs to include terms addressing the following in the memorandum of association (MOA) (often the first point of reference in the event of any disagreement):

a list of matters which require a super majority (for example 75%) to pass as resolution effectively giving the foreign shareholder veto rights.
a profit share distribution regime which permits the foreign shareholder to benefit from profits exceeding the number of shares held by the foreign shareholder (while being careful not to deprive the local shareholder of the right to participate in the profits). Notaries in different Emirates will approve of different profit share distribution ratios;
the right of the foreign shareholder to select and appoint a general manager of the company.

Foreign shareholders should also supplement the MOA with a shareholders’ agreement which contains further provisions addressing the relationship between the shareholders and their respective rights and obligations.

Most important of all, careful selection of a local shareholder partner can provide the foreign shareholder with autonomy to carry out and operate the business of the LLC within the parameters of the law but without problematic interference.