Pre-emption, consent thresholds, tag and drag: which transfer restrictions apply by default

A transfer restriction answers two questions: who may buy a share, and in what order. UAE law answers part of this by default for a registered family company. The rest operates only where a document creates it.

The statutory layer sits in Federal Decree-Law No. 37 of 2022.

• Article 8(1): a partner who wants to dispose of a share offers it to the remaining family partners. As an exception, that partner may assign it, with or without compensation, to his wife or a relative up to the first degree, unless the charter or the memorandum stipulates otherwise.
• Article 8(2): disposal to a non-family member requires the approval of partners holding at least three quarters of the capital, unless the memorandum stipulates another percentage. The seller and the remaining partners may agree to reallocate the shares to be sold as class B as a condition of permitting that sale.
• Article 8(3): where a non-family third party comes to own a share in any other way, the remaining partners have sixty days from the date of that ownership to request redemption, each according to his share. If no partner requests redemption the share is offered to the company, and if it is not redeemed within thirty days of that offer the third party may hold it.
• Article 24(2): an heir may remain a partner in proportion to the inherited share, or dispose of it subject to Article 8.

Where the Decree-Law is silent, Article 26(1) leaves the Commercial Companies Law applicable. For a limited liability company, Article 80 of Federal Decree-Law No. 32 of 2021 requires a partner assigning to a non-partner to notify the other partners, through the manager, of the assignee and the terms. Every partner may request redemption within thirty days of the manager being notified of the agreed price, and where the price is disputed the interest is valued by experts nominated by the Competent Authority at the applicant's expense. If those days lapse unused, the partner is free to dispose. Under Article 79 an assignment is not enforceable against the company or third parties except from its entry in the commercial register, and the company may not refuse entry unless the assignment violates the memorandum or the Decree-Law.

Four mechanisms familiar from shareholders' agreements are not default rules, and operate only where a document creates them.

• Tag along: an option allowing a minority family shareholder to join a sale by a majority shareholder to a non-family buyer, so the minority is not left alongside a majority outsider.
• Drag along: the ability of a majority seller to require a minority to join the sale.
• Further rounds of offer after the statutory round, for example a second offer to all shareholders in proportion, then an offer to a defined class of wider family.
• Limits on frequency and size, for example one sale a year, or a cap on the percentage of a personal holding sold in a year.

A 2019 paper jointly developed by PwC and the Family Business Council Gulf treats all four as contractual, and records that a drag along right is not commonly used in family businesses in the authors' experience. That position has since moved. Published analyses of Federal Decree-Law No. 20 of 2025, which the Ministry lists on its companies legislation index as amending the Commercial Companies Law, record that an amended Article 14 permits drag along and tag along rights, and provisions for acquiring a deceased shareholder's shares, in the memorandum or articles of a limited liability company or a private joint stock company from October 2025. They record that statutory pre-emption was retained, that these rights remain subject to it in a limited liability company, and that parts of the amendment await implementing regulations.

Enforcement has limits. The 2019 paper describes specific performance as the remedy sought where a departing holder does not transfer as agreed, notes that courts can be inconsistent in awarding it, particularly where it would be oppressive, and records that damages may be awarded instead.

Under a Dubai family property contract, Article 13 of Dubai Law No. 9 of 2020 requires a partner or heir to offer a share to the other partners in proportion to their shares, excepting assignment to a spouse, a first degree relative or a specific partner unless the contract provides otherwise. Disposal to a non-partner requires the approval of partners owning at least fifty-one per cent. Where no partner wishes to acquire, or the partners object, the Tribunal may permit a disposal it finds reasonably justified, provided it does not affect the integrity of the family property.

Each of these routes turns on a number. Article 8(3) ends at a value determined by the committee, and Article 9(2) states how it arrives at one.

Sources, all retrieved 11 August 2026. Federal Decree-Law No. 37 of 2022: https://www.moet.gov.ae/documents/20121/0/family+company+english+version+examined+and+correcetd.pdf Federal Decree-Law No. 32 of 2021 on Commercial Companies: https://www.moet.gov.ae/documents/20121/376326/Commercial+Companies.pdf Ministry of Economy and Tourism legislation index, listing Law by Decree No. 20 of 2025: https://www.moet.gov.ae/en/companies-legislations Gibson Dunn on the 2025 amendments: https://www.gibsondunn.com/recent-amendments-to-the-uae-commercial-companies-law/ Cleary Gottlieb on the 2025 amendments: https://www.clearygottlieb.com/news-and-insights/publication-listing/uae-companies-law-update-2025 Dubai Law No. 9 of 2020: https://dlp.dubai.gov.ae/Legislation%20Reference/2020/Law%20No.%20(9)%20of%202020%20Regulating%20Family%20Property%20in%20the%20Emirate%20of%20Dubai.pdf PwC and Family Business Council Gulf, April 2019: https://fbc-gulf.org/mediafiles/articles/doc-1495-2019_05_16_07_05_53.pdf

This content is written with law firms as an educational reference on how these mechanisms appear in current law. It is not legal, tax or financial advice, no provision described here has been verified or endorsed by the programme, and a family takes its own advice on its own circumstances.