An international company closing an acquisition in the UAE now faces a materially different compliance sequence than it did twelve months ago. The Ministry of Economy (UAE's federal ministry responsible for investment policy) has expanded its foreign investment screening regime. New mandatory notification requirements took effect in early 2025. Companies that overlook this obligation risk transaction delays, regulatory penalties, and – in the most serious cases – forced unwinding of completed deals.
The UAE's updated foreign investment screening rules require foreign investors to submit a formal notification to the Ministry of Economy before completing acquisitions that meet defined threshold criteria across designated sectors. The notification obligation applies to both onshore entities and, in certain circumstances, companies incorporated in free zones. Non-compliance can trigger administrative sanctions and jeopardise the legal validity of the transaction.
This alert explains what changed, which businesses are affected, and what immediate steps international investors and their counsel must take.
What changed – and when it took effect
The UAE's investment legislation has long distinguished between activities open to full foreign ownership and those subject to restriction. The 2021 amendments to that legislation expanded sectors eligible for 100% foreign ownership. The 2025 notification rules represent a separate, procedural development layered on top of those ownership rights.
Under the updated rules, foreign investors must file a pre-closing notification with the Ministry of Economy when an acquisition meets the applicable thresholds. This requirement is separate from any approvals issued by a relevant Free Zone Authority (a designated regulatory body governing companies incorporated within UAE free zones such as DIFC or ADGM) or by the Department of Economic Development. known as the DED – at the emirate level.
The screening mechanism now operates at the federal level. It sits alongside existing sector-specific licensing regimes. Investors who previously relied on DED or Free Zone Authority approvals alone may now be out of step with federal requirements.
The notification window closes a fixed number of days before the intended completion date. Transactions submitted after this window trigger a mandatory review period that can extend the overall timeline by several weeks. Investors planning closings without accounting for this period face the prospect of breach of the agreed long-stop date under their transaction documents.
Who is affected – sector scope and threshold criteria
The notification requirement applies to foreign investors – defined as non-UAE-national persons and entities – acquiring ownership stakes or control rights in UAE-incorporated companies. Both onshore mainland entities and, in specified circumstances, free zone companies are in scope.
Designated sectors currently subject to mandatory screening include telecommunications infrastructure, financial services, energy, healthcare, defence-related manufacturing, and certain categories of transport and logistics. The Ministry of Economy retains discretion to designate additional sectors by ministerial decision, so the list should be verified at the time of each transaction.
The threshold criteria that trigger the notification obligation include:
- Acquisition of a shareholding that confers control or significant influence over the target entity
- Transactions where the target's revenues or assets exceed a prescribed scale within a designated sector
- Indirect acquisitions – where the foreign investor acquires a non-UAE holding vehicle that itself holds UAE assets or shares
- Greenfield investments in designated sectors that exceed defined capital commitment levels
A non-obvious complication: the threshold analysis applies to the economic substance of the transaction, not merely its legal form. Restructurings characterised as internal group reorganisations may nonetheless trigger the notification requirement if they result in a change of ultimate beneficial ownership across a relevant threshold.
Investors operating through Abu Dhabi Global Market (ADGM) or Dubai International Financial Centre (DIFC) structures should note that free zone incorporation does not automatically exempt a transaction from federal screening. Where the target's business activities extend onshore – even through service agreements or agency arrangements – the federal notification rules may apply in parallel with DIFC Courts or ADGM regulatory procedures.
To receive an expert assessment of your transaction's notification exposure in the UAE, contact us at info@ferrazwhitmore.com.
Immediate actions for international companies
International investors and in-house legal teams should take the following steps without delay.
- Audit your current UAE pipeline. Review all live and planned acquisitions, joint ventures, and capital commitments against the updated sector list and threshold criteria. Do not assume prior Ministry of Economy or DED clearances remain sufficient.
- Recalibrate transaction timelines. Build the notification window and any potential review period into your signing-to-closing schedule. Advisers should update conditions precedent checklists in share purchase agreements and investment documents accordingly.
- Assess indirect and restructuring transactions. Where a non-UAE holding company is being acquired, analyse whether UAE-based subsidiaries or business activities cross the designated thresholds. Beneficial ownership changes at the holding level can trigger UAE federal review obligations even when no UAE shares are directly transferred.
- Engage with disclosure obligations early. The notification package requires detailed information on the investor's corporate structure, ultimate beneficial owners, funding sources, and the intended business purpose of the acquisition. Assembling this documentation – equivalent in scope to a securities offering prospectus or an IPO disclosure pack – takes time. Late preparation is one of the most common causes of preventable delays.
- Coordinate with sector-specific regulators. For transactions involving financial services entities, investment fund managers, or listed securities, the Ministry of Economy notification runs concurrently with DIFC Authority, ADGM, or Securities and Commodities Authority procedures. Neither process waives the other. Confirm the sequencing and interdependencies before signing.
For the banking and finance dimensions of structuring inbound UAE investments, including listing requirements and capital adequacy considerations, see our advisory on banking and finance matters in the UAE. Companies already active in UAE capital markets. including those with existing securities offering or IPO mandates. should review how the new screening rules interact with their ongoing disclosure obligations under our capital markets practice in the UAE. For a comparative view of how regional screening regimes are developing, our alert on investment screening in Singapore sets out a useful parallel framework.
About Ferraz & Whitmore
Ferraz & Whitmore is an international law firm based in Lisbon, advising business clients across 46 jurisdictions. Our team combines Portuguese civil law expertise with English common law tradition to deliver cross-border legal solutions in foreign investment screening. Capital markets. Additionally, regulatory compliance in the UAE and across the Middle East and Asia-Pacific region. Engaging a lawyer in UAE matters with genuine cross-border experience is essential when federal and free zone regulatory procedures intersect. As an international law firm advising on UAE investment transactions, we work with multinational corporations, institutional investors, and in-house legal teams managing complex multi-jurisdictional deal structures. Our practitioners have advised on transactions subject to review by the Ministry of Economy, DIFC Courts. Additionally. ADGM regulatory bodies. Additionally, our capital markets practice spans civil law and common law systems across 15 practice areas. To discuss your UAE investment screening obligations, contact us at info@ferrazwhitmore.com.
Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Ferraz & Whitmore assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@ferrazwhitmore.com.