Best Acquisition / Leveraged Finance Lawyers in Abu Dhabi

About Acquisition / Leveraged Finance Law in Abu Dhabi, United Arab Emirates

Acquisition and leveraged finance refers to the legal and financial structuring of loans and other borrowing arrangements used specifically to finance the purchase of businesses, assets, or shares. In Abu Dhabi, United Arab Emirates, this area of law plays a crucial role for investors, private equity firms, corporations, and lenders during major buyouts and corporate transactions. Transactions often involve complex structuring with multiple parties, including local and international banks, financial institutions, sponsors, and various counsel, all operating within the unique regulatory landscape of the UAE. While Abu Dhabi aligns with federal UAE law, it also follows Emirate-level regulations and accommodates the influence of Islamic finance principles in certain transactions.

Why You May Need a Lawyer

Legal counsel is essential for anyone involved in acquisition or leveraged finance arrangements in Abu Dhabi due to the complexity and magnitude of these transactions. Key scenarios where legal help is vital include:

• Negotiating and documenting acquisition or leveraged finance deals
• Conducting due diligence on targets and lenders
• Structuring regulatory-compliant transactions in accordance with UAE and local Abu Dhabi laws
• Navigating cross-border elements and related foreign investment restrictions
• Advising on the application of Shariah law in Islamic finance structures
• Resolving disputes that may arise among parties involved in financing transactions
• Ensuring proper registration and enforcement of security interests and collateral
• Drafting or reviewing finance documents such as facility agreements, security documents, and guarantees
• Addressing competition and anti-trust issues in acquisition finance deals

Local Laws Overview

Acquisition and leveraged finance transactions in Abu Dhabi are governed by a mix of UAE federal laws, Emirate-level regulations, and, where applicable, regulations of free zones such as Abu Dhabi Global Market (ADGM). Here are some key legal considerations:

• Foreign Investment Restrictions: The UAE allows up to 100 percent foreign ownership for certain business sectors, but limits and pre-approval requirements remain for strategic sectors. Foreign ownership rules are critical in structuring acquisitions.
• Security and Collateral: UAE law recognizes various types of security, such as pledges over shares, mortgages over real estate, and assignments of receivables. These must often be registered with relevant local authorities. New movable assets security laws provide for perfection and prioritization of security interests.
• Islamic Finance: Many transactions utilize Shariah-compliant structures like murabaha or ijara, especially when involving Islamic banks or investors.
• Banking and Lending Licensing: Only licensed banks and financial institutions can provide lending services. Cross-border lending has specific regulatory and tax implications.
• Enforcement: Abu Dhabi courts, UAE federal courts, and, for transactions in the ADGM, English law courts, may have jurisdiction. Enforcement of foreign judgments and security may present challenges, particularly for offshore financiers.
• Competition Law: UAE federal law governs mergers and acquisitions that may impact market competition, requiring certain deals to be notified or approved by the relevant competition authority.
• ADGM and DIFC: These financial free zones have their own common law-based regimes and court systems, offering alternative structures and legal remedies for structuring and enforcing finance transactions.

Frequently Asked Questions

What is leveraged finance in the context of Abu Dhabi?

Leveraged finance refers to securing funding using leverage that is, borrowing significant amounts of money to fund acquisitions or generate returns, typically secured against the acquired assets or shares. In Abu Dhabi, this can involve a mix of conventional or Islamic finance structures, provided through local or international financial institutions.

Can foreign investors obtain acquisition finance in Abu Dhabi?

Yes, foreign investors can seek acquisition finance in Abu Dhabi. However, they must comply with UAE laws regarding foreign ownership in certain sectors and receive any required regulatory approvals.

What types of collateral are commonly used in leveraged finance deals?

Common collateral includes company shares, real estate, bank account pledges, rights over contracts or receivables, and sometimes inventories or equipment. Security interests usually need to be registered with local government entities for validity and enforcement.

Is Shariah-compliant financing required for all deals in Abu Dhabi?

No, both conventional and Shariah-compliant (Islamic) finance options are available. The choice often depends on the parties involved and their preferences or institutional mandates.

How are acquisition finance documents typically governed?

Outside of free zones like ADGM, most documents are governed by UAE law. In ADGM or DIFC, parties may choose English law. This affects contract interpretation, dispute resolution mechanisms, and enforcement.

Are there requirements for financial assistance prohibitions?

The UAE does not have statutory financial assistance prohibitions like some other jurisdictions, but companies should act in compliance with their constitutional documents and duties of directors, as well as regulatory requirements.

What is the role of due diligence in acquisition finance?

Legal due diligence is essential to identify risks, verify assets and liabilities, check for outstanding debts or litigation, ensure valid corporate authority, and confirm ownership or status of collateral before commitment to a deal.

Can a non-UAE bank provide a loan for an acquisition in Abu Dhabi?

Non-UAE banks can sometimes provide acquisition finance, especially in cross-border deals. However, direct lending to UAE entities may be subject to regulatory and licensing constraints, and tax or withholding issues may apply.

What steps are involved in perfecting security interests?

Perfection usually requires registration of the security interest or collateral with local authorities, submitting notarized documents, and in some cases, obtaining governmental approvals, depending on asset type and sector.

How are disputes resolved in acquisition finance transactions?

Dispute resolution can occur through local UAE courts, ADGM or DIFC courts for contracts governed by their laws, or via arbitration if parties so choose. The applicable forum depends on the governing law and jurisdiction clause in the finance documents.

Additional Resources

• Abu Dhabi Department of Economic Development (ADDED): The primary governmental body for business licenses, foreign investment, and economic regulations in Abu Dhabi.
• Abu Dhabi Global Market (ADGM): A financial free zone offering regulatory guidance for acquisition and leveraged finance deals under a common law framework.
• Central Bank of the UAE: Regulates financial institutions and oversees banking activities including lending practices in the UAE.
• Ministry of Justice: For information on laws and regulations pertaining to contracts, litigation, and the operation of courts in Abu Dhabi.
• UAE Ministry of Economy: Resource for competition law, foreign investment regulations, and business compliance matters.
• Professional legal and financial advisors: Consulting reputable law and accounting firms with experience in UAE acquisition and leveraged finance is recommended for tailored guidance.

Next Steps

If you are considering or involved in an acquisition or leveraged finance transaction in Abu Dhabi, it is prudent to take the following steps:

• Clarify your business objectives and the nature of the transaction you wish to undertake
• Identify and engage a law firm or legal advisor with proven experience in UAE acquisition and leveraged finance transactions
• Prepare necessary information and documents for preliminary assessment by your legal advisor, such as corporate structure, business plans, financials, and intended deal structure
• Discuss with your advisor the optimal structure for your deal, including both legal and tax considerations
• Ensure that any facility agreements, security documents, and related legal papers undergo thorough drafting and review by professionals familiar with UAE law and local practices
• Where necessary, seek regulatory guidance and secure the relevant governmental or sector approvals before finalizing the transaction
• Consider future dispute resolution mechanisms suitable for your particular deal and cross-border needs

By working alongside specialized legal experts from the outset, you can anticipate regulatory challenges, structure finance arrangements efficiently, and protect your interests throughout the life of the transaction.