Memorandum of Association (MoA) in the UAE: Comprehensive Guide

In the UAE, the business environment has not only been made conducive but also legally sound. The legal requirements regarding business setup in the UAE are clearly defined, ensuring best practices and protecting the rights of all stakeholders. One such important aspect of this framework is the preparation and registration of the Memorandum of Association UAE.

The MoA is not just a legal formality but a roadmap that outlines how a company will operate and be governed. In this special article, we will look at the importance of the MOA, why it matters, and how to correctly draft it. Let us begin by understanding its basic meaning.

Meaning of Memorandum of Association UAE

Memorandum of Association (MoA) in UAE is a legal document which is prepared for the purpose of company formation and registration. It defines the company’s name, operational scope, structure, objectives, share capital details, shareholders liability, etc.

Whenever a company incorporation application is made, MoA UAE needs to be necessarily submitted. Without a notarized and registered MoA, a company will not be able to get the trade license in UAE. Thus, it is very important document to operate legally in the nation.

Remember, when drafting MoA, its contents must be carefully included as per the UAE rules and regulations.

Importance of MoA in UAE for companies

For a company, the Memorandum of Association (MoA) UAE serves several important purposes, including:

• Providing the company with a legal identity by defining its purpose and business activities.
• Being a mandatory requirement for business registration and trade license applications.
• Memorandum of Association UAE acts as a legal proof in case of disputes or ambiguities.
• Protecting shareholders from company debts by clearly defining their liabilities.
• Clearly defining the company’s financial structure, including profit and loss distribution, capital contribution, and ownership percentages.

How to draft MoA in UAE? – Key components

There are standard clauses (components) under UAE law that must be included in every Memorandum of Association UAE. When drafting MoA for your company in UAE, you must typically include the following clauses:

1. Name clause: In the name clause, you will have to mention the company name. Such a name must be approved by the authorities. The name must be unique and must mention the legal form of your business.

For example, in the case of a limited liability company, the name can be “XYZ Trading LLC”. Besides that, the name must not be inappropriate, such as anything against any religion, etc.

2. Registered office clause: Under this clause, you must mention the location of your company. This will include both the Emirate (such as Dubai, Abu Dhabi, Sharjah) as well as the office location. Your official address is important as that is where you will receive your mails and it acts as physical address proof (which may be needed for a trade license).

3. Objective clause: The objective clause is essentially all about your business activities. Your business operations must align with the type of trade license you will be applying for. Remember, you must mention business activities to conduct them legally.

4. Capital clause: Here, you will have to provide details about the authorized share capital of the company. The authorized capital is the maximum capital that the company intends to raise. It must also mention how many shares will be issued. For example, share capital of AED 200,000 can be divided into 20,000 shares, priced at AED 10 each.

5. Shareholding clause: This clause provides details about the shareholders and their contributions, specifying whether these are in cash or kind. It also outlines the percentage of ownership each shareholder holds.

For example, if XYZ owns 30% of the company, this should be clearly mentioned. Any information related to preferential shares should also be included.

6. Liability clause: The extent to which a company’s shareholders will be responsible for its losses and debts is mentioned in the liability clause. Whether the company is limited by shares, limited by guarantee, or unlimited must be clearly stated.

7. P&L distribution clause: The profits and losses of the company are typically distributed in proportion to the shareholding ratio. If any other distribution ratio is agreed upon, it must be clearly specified in Memorandum of Association UAE.

8. Management clause: Details about the appointment of managers and the Board of Directors (BOD), including their powers, responsibilities and the process of appointment, must be clearly mentioned in the Memorandum of Association (MOA).

9. Duration clause: Although companies are generally established with no fixed end date, if the company intends to operate for a specific duration, this must also be clearly mentioned in the MOA.

10. Association clause: This is a declaration clause where shareholders/promoters mutually agree to register the company and with all the conditions set out in MoA.

11. Additional clause: Apart from the clauses mentioned above, additional clauses may be included as per the agreement between the parties involved. Examples:

• Clause related to amendment of MOA.
• Methods of dispute resolution.
• Company dissolution protocols.
• Conditions for introducing new partners (in case of partnership).
• Non-compete clause which says shareholders cannot start a competing business.
• Special voting rights clause.

Note: To make sure your MOA format is 100% compliant with the legal requirements, it is advisable to seek guidance from one of our experts at Dubiz Business Setup.

Guidelines regarding Memorandum of Association in UAE

There are some basic legal requirements regarding the memorandum of association UAE:

• Language requirement: The MOA must be written in Arabic. If it is in English, then you would need legal translation to Arabic. The Arabic version will be used in legal matters.
• Notarization of MOA: The MOA must be notarised with UAE Notary Public, which authenticates and validates it, including the signatures therein.
• Registration of MOA: To formalize the company’s existence, the MOA must be registered with the economic department of the relevant emirate or the respective free zone authority. This step is essential for the MOA to be considered valid.

How to register a Memorandum of Association in UAE?

The steps to register MOA in UAE include:

Step 1 – Draft preparation

In the first step, you will prepare the MOA draft. Make sure to include key clauses like the ones we discussed earlier. Usually, companies use a pre-approved template or MOA UAE sample as provided by the relevant authority or seek help from a professional business setup consultant in Dubai who can assist with drafting the MOA.

The MOA can be prepared in English or Arabic, but the Arabic version will be required for legal matters, as per UAE law. Make sure your submission is complete and accurate. Any errors may result in rejection or delays.

Step 2 – Initial approval

Once you have prepared the MOA, the next step is to obtain initial approval for business formation in the UAE. You can apply through the Department of Economic Development (DED) in case of a mainland setup or through the respective free zone authority. This step includes obtaining initial permissions for the business activity and trade name.

Step 3 – Notarisation

All shareholders or their authorized signatories with power of attorney must sign the MOA before a UAE notary public. The notary will cross-check everyone’s IDs, their consent to form the company, and then will stamp and sign MoA. Thus, giving it legal status.

All the required parties must carry essential documents with them, such as Emirates ID and passport. If anyone cannot attend, they must send an authorized signatory on their behalf to sign.

The notary process will include the payment of certain fees. The fees vary based on the type and value of the document. After the notarization process is complete, you will receive the attested Memorandum of Association UAE.

Step 4 – Submission for registration

Next, you must submit the notarised MoA along with all other the documents, to the relevant authorities for registration and approval of license. The authority will be DED if the company is being registered in the mainland or respective free zone authority.

Remember, it is very important to submit the MOA as part of the business license application. Once the authority approves the documents, you can proceed to pay the license fees, and you will receive your trade license and registration certificate.

Note: For regulated business activities, you may also need to seek approvals from additional government departments.

Step 5 – Post registration

Next, the company must register with the Chamber of Commerce of the Emirate and complete the visa and business bank account setup. In future, if there is any change regarding the share capital, business activity, partners, the MoA must be amended and again notarised through the same process.

Does the process feel complex? Do not worry! We can help you through it.

Difference between MoA and AoA

Many individuals get confused between the MoA and AoA, but there are subtle differences between the two. Here are the differences between the MoA and AoA:

Mistakes to avoid when preparing MoA

When preparing a Memorandum of Association UAE, you must be vigilant about the following points to avoid rejections and delays:

1. Not getting the MoA notarized:

If the MoA is not notarized by the Notary Public in the UAE, it will not be considered legally valid.

2. Unclear business activities:

Mentioning vague or incorrect business activities or failing to include the ones you intend to conduct can lead to legal complications.

3. Copy-pasting someone else’s MoA:

Every business is unique and so must be its MoA. Even if you are using a generic Memorandum of Association template Dubai, you must tailor it specifically to your business operations.

4. Skipping essential clauses:

As mentioned in this article, there are mandatory clauses that must be included, such as business activities, registered office address, shareholding structure, and profit & loss distribution.

5. Not reviewing before finalizing:

Proofreading the MoA before submission is crucial. Any mistakes can be corrected before submission for registration, saving time and avoiding delays.

6. Not amending the MoA when needed:

As your business grows, its operations and structure may change. In such cases, it is necessary to amend the MoA UAE and get the amendments approved to remain compliant.

Dubiz offers expert document clearance

When starting a business in Dubai or anywhere in the UAE, it is essential to be careful with legal requirements and documentation. Any mistake or oversight can lead to delays or even halt the business registration process.

That is why it is better to rely on industry experts who have complete knowledge of the ins and outs of company registration in the UAE. Dubiz Business Setup has been helping entrepreneurs for many years.

Our team of experts fully understands the legal landscape of the UAE. From PRO services to expert document clearance, we can guide you through the preparation and registration of the Memorandum of Association UAE.

Book your call with us today to further discuss your needs.

📞 Call: +971 56 369 5485

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📧 Email: info@dubiz.co

Frequently Asked Questions (FAQs)

1. What is the cost of drafting and registering an MoA in UAE?

The cost of drafting and notarizing MOA in UAE is around AED 600*. Costs can vary based on business type and location. Please consult or experts at Dubiz business Setup.

2. Do all businesses in the UAE need a Memorandum of Association (MoA)?

Yes, all companies in the UAE, whether established on the mainland or in a free zone, generally require a Memorandum of Association (MoA).

3. Do you need to renew the MoA every year?

No, you do not need to renew the MoA every year in the UAE. However, if any changes are made to the business, the relevant amendments must be made to the MoA and registered accordingly.

4. Can Memorandum of Association UAE be amended?

Yes, UAE Memorandum of Association can be amended as needed. However, there are legal conditions and procedures that must be met for the amendment to be valid.

5. Can I start a business in Dubai without an MoA?

No, you cannot start a business without an MoA in Dubai. Memorandum of Association Dubai must be submitted when applying for a trade license and company registration in the UAE.