Background
A long-established UAE exchange house regulated by the Central Bank of the UAE planned to bring in a well-known US based financial services company as a strategic investor. The exchange house intended to sell 40 percent of its shares to the US investor in return for a significant capital infusion. This partnership was expected to strengthen the company’s financial position and support new growth plans. Since the business operated in a heavily regulated sector, every commercial decision needed to comply with CBUAE rules.
Our Role
We acted as the legal advisors for the exchange house throughout the transaction. Our work involved a mix of regulatory guidance, deal structuring and detailed drafting support. In particular, we:
- Reviewed CBUAE regulations to identify the limits and requirements relevant to foreign ownership, shareholder rights and governance.
- Developed a compliant deal framework and ensured that the Letter of Intent, Term Sheet, Share Sale Agreement and Shareholders Agreement reflected CBUAE expectations.
- Drafted, revised and negotiated all transaction documents with the US investor’s legal team, addressing several commercial and regulatory concerns along the way.
- Updated the constitutional documents of the exchange house to incorporate the rights of the new investor while keeping the company aligned with regulatory norms.
- Joined discussions with both parties to help bridge commercial expectations and regulatory obligations.
This Case Study is a Part of Our Mergers and Acquisition Services.
Key Challenges
Two major commercial issues required careful handling. The first involved the US investor’s request for a disproportionate distribution of dividends. This raised questions under the regulatory framework and needed a structure that would satisfy both the investor and the regulator. The second related to governance. The investor wanted enhanced board rights, and a list of veto matters to protect its investment. These requests had to be balanced with CBUAE requirements on control, shareholder involvement and management oversight.
Both issues needed detailed analysis because even minor changes in governance or distribution rights can affect regulatory approvals for companies supervised by the Central Bank of the UAE.
Outcome
We worked closely with the exchange house management and engaged in regular discussions with the investor’s team to reach a structure that was commercially acceptable and regulator friendly. The dividend mechanism was aligned in a manner that met the investor’s expectation without breaching any regulatory rules. The board composition and veto matters were also reshaped to give the investor comfort while ensuring that the company stayed within the compliance boundaries set by CBUAE.
The transaction was completed successfully. The exchange house secured the planned capital infusion, welcomed a strong international partner and maintained full regulatory compliance. Our involvement allowed the deal to move forward smoothly and helped both parties achieve their business goals.
