The Honorable Abdullah bin Touq Al Marri, Minister of Economy and Tourism, has issued Ministerial Resolution No. (83) of 2026, marking a significant shift in the regulatory philosophy governing private joint-stock companies. The resolution aims to move beyond traditional time-based restrictions on share transfers and to introduce greater capital flexibility aligned with the requirements of modern financial markets.

From Restriction to Incentive: The New Regulatory Approach

Historically, lock-up periods on share transfers in private joint-stock companies served to protect companies from early-stage volatility and to ensure stability in shareholder structure. The new resolution redefines this approach by transitioning from a rigid temporal restriction model to a “transparency-for-flexibility” framework. Under this framework, the lock-up period may be reduced depending on the company’s compliance with governance and disclosure standards.

Three Mechanisms for Reducing the Lock-Up Period

The resolution establishes three primary pathways through which the lock-up period may be shortened, thereby incentivizing improved management efficiency and regulatory compliance:

1.             Financial Transparency Pathway:
The lock-up period may be reduced to seven (7) months where the company commits to publishing reviewed quarterly financial statements. This measure advances gradual alignment with disclosure standards applicable to publicly listed companies.

2.             Talent Attraction Pathway:
The lock-up period may be reduced to six (6) months for employee incentive shares, reflecting a policy orientation supportive of startups and technology-driven enterprises by enabling employees to hold and liquidate equity-based compensation instruments.

3.             Professional Investment Pathway:
Professional investors may be granted exit flexibility after six (6) months when utilizing multiple share classes, thereby enhancing the UAE’s attractiveness to venture capital funds and other sophisticated investment vehicles.

Developments in Transaction Structuring (Drag-Along and Tag-Along Rights)

The resolution expressly recognizes internationally accepted contractual mechanisms, particularly Drag-Along Rights and Tag-Along Rights, as exceptions to share transfer restrictions. This recognition facilitates smoother exit transactions and the sale of companies to strategic investors, while improving clarity and enforceability of exit strategies.

Governance and Regulatory Compliance Requirements

The resolution requires companies to notify the Ministry of Economy and relevant authorities within ten (10) business days of completing any share transfer transaction. This requirement is intended to ensure the timely updating of commercial registers, enhance transparency, and prevent unregulated secondary trading outside the legal framework, thereby safeguarding the rights of shareholders and stakeholders.

Expected Economic Impact

The repeal of Ministerial Resolution No. (50) of 2025 and its replacement with this new resolution is expected to enhance liquidity within private companies. Anticipated outcomes include:

• Increased merger and acquisition activity;
• Encouragement of family-owned businesses to convert into private joint-stock companies with greater ease of introducing strategic partners; and
• Strengthening the UAE’s competitiveness as a flexible and investment-friendly legal jurisdiction.

Ministerial Resolution No. (83) of 2026 reflects the UAE’s continued efforts to modernize its corporate regulatory framework in line with the “We the UAE 2031” vision. It seeks to strike a balanced approach between preserving corporate stability and enabling shareholder liquidity, thereby reinforcing the country’s position as a leading business and investment hub in the region.