For two or more founders
Co-founders' shareholders' agreement in the UAE
The short answer
Two or more founders paper their relationship with a shareholders' agreement, the private contract that says what the memorandum the authority filed does not: what happens when one leaves, wants to sell, stops working or disagrees. It is legal advice and drafted by lawyers licensed to practise in the UAE under a legal engagement letter; we brief them from your corporate file, reconcile the agreement with the memorandum, and carry out the corporate steps it calls for.
The memorandum of association is the company's constitution. For an onshore LLC it is attested by the licensing authority and takes effect only once registered in the commercial register. It records who holds what, how decisions are taken and how shares transfer. It usually says little about vesting, a founder who stops contributing, a sale one founder wants and another does not, a deadlock, or the terms of a new investor. A shareholders' agreement is the private contract that covers those points, and it is cheapest to agree before anyone has a grievance.
Because the agreement sits beside a public document, the two must agree: reserved matters in the agreement need the memorandum's decision thresholds to allow them, transfer restrictions need the authority's transfer process to enforce them, and some provisions are only effective if the memorandum is amended to carry them. That reconciliation is corporate work, and it is what we do around the law firm's drafting.
At a glance
- Indicative cost
- The law firm quotes its own fee under its own engagement, usually fixed for a defined document; the Velarozone service fee for the brief and the corporate steps is itemised in your engagement letter.
- Timing
- The brief takes days; drafting and negotiation take as long as the founders need. Filings follow signature: an ADGM company notifies the Registration Authority of amended articles within 14 days, and an onshore company notifies within 15 business days of a change to registered details.
- What's included
- A written brief from your corporate file
- Lawyers licensed in the UAE, matched to the matter
- Memorandum amendments, resolutions and filings after signature
This is for you if
- Two or more founders hold shares, or will, and the only document between them is the memorandum, with no vesting or leaver terms.
- One founder puts in money and another puts in time, and the share split should show both, with vesting for the founder whose contribution is time.
- An investor is coming in and will ask for pre-emption, anti-dilution or a board seat, which a memorandum of association does not usually carry.
- You would rather agree today who buys a leaving founder's shares, and on what terms, than argue it later.
This may not be the right route if
- You want legal advice from Velarozone; we are not a law firm and the agreement is the law firm's work.
- You want a template signed without anyone reading it against the memorandum.
- There is already a dispute; that is a matter for a lawyer first, and we bring one in.
At a glance
- Indicative cost
- The law firm quotes its own fee under its own engagement, usually fixed for a defined document; the Velarozone service fee for the brief and the corporate steps is itemised in your engagement letter.
- Timing
- The brief takes days; drafting and negotiation take as long as the founders need. Filings follow signature: an ADGM company notifies the Registration Authority of amended articles within 14 days, and an onshore company notifies within 15 business days of a change to registered details.
- What's included
- A written brief from your corporate file
- Lawyers licensed in the UAE, matched to the matter
- Memorandum amendments, resolutions and filings after signature
What this service includes
- A written brief for the law firm from your corporate file: shareholders, capital, memorandum, what each founder contributes.
- Lawyers licensed to practise in the UAE, matched to the matter, engaged under a letter that names them.
- The agreement read against the memorandum, and the amendments the agreement needs identified.
- The corporate steps carried out: memorandum amendments attested by the authority and registered, shareholder resolutions, and the authority notification, which onshore is due within 15 business days of a change to registered details.
- One point of contact across the legal and corporate work.
What it does not include
- Legal advice from Velarozone, in any form.
- The law firm's fees, which it quotes and bills under its own engagement letter.
- Any promise about how a future dispute would be resolved.
Process
How the work is sequenced
Each stage has its own dependencies (activity approvals, document legalisation, authority processing, and bank review), and we report progress against them rather than against one overall date.
- 01
Brief
The founders' positions, contributions and concerns written into a brief from the corporate file.
- 02
Engage
The law firm introduced; it issues its own engagement letter and agrees its fees with you.
- 03
Draft and negotiate
The firm drafts and the founders negotiate; we supply the corporate facts as needed.
Staff equity is a separate instrument. Options and phantom shares sit outside the founders' agreement and have their own guide.
Prefer to start in writing? Send the details through the contact form.
Start with a structure assessment
In an initial consultation you receive a plain-language decision summary, a document-preparation list, and the next actions for your situation. Current figures are confirmed within your adviser-reviewed route comparison.
Memorandum or agreement
What each document does
Seven questions founders fall out over, and which document answers each in an onshore LLC.
The memorandum of association against a shareholders' agreement, by question.
Who owns what
- Memorandum of association
- Yes, on the public register
- Shareholders' agreement
- Repeats it, and says what changes it
A founder stops working
- Memorandum of association
- Silent
- Shareholders' agreement
- Vesting, good and bad leaver, what happens to the shares
Selling the company
- Memorandum of association
- Transfer steps; drag and tag clauses allowed
- Shareholders' agreement
- Drag-along, tag-along, who can block a sale
Deadlock
- Memorandum of association
- Voting majorities; LLC default in Article 96 can be raised
- Shareholders' agreement
- How a deadlock is broken
A new investor
- Memorandum of association
- Share capital and transfer process
- Shareholders' agreement
- Pre-emption, anti-dilution, board seats
Confidentiality and non-compete
- Memorandum of association
- Silent
- Shareholders' agreement
- Yes, where the law allows
Who enforces it
- Memorandum of association
- The authority's register and process
- Shareholders' agreement
- The parties, in the forum the agreement chooses
| Question | Memorandum of association | Shareholders' agreement |
|---|---|---|
| Who owns what | Yes, on the public register | Repeats it, and says what changes it |
| A founder stops working | Silent | Vesting, good and bad leaver, what happens to the shares |
| Selling the company | Transfer steps; drag and tag clauses allowed | Drag-along, tag-along, who can block a sale |
| Deadlock | Voting majorities; LLC default in Article 96 can be raised | How a deadlock is broken |
| A new investor | Share capital and transfer process | Pre-emption, anti-dilution, board seats |
| Confidentiality and non-compete | Silent | Yes, where the law allows |
| Who enforces it | The authority's register and process | The parties, in the forum the agreement chooses |
The service
Legal services
Velarozone handles the corporate side: the brief, memorandum amendments, resolutions and filings. The law firm advises on the agreement and bills for it.
See the legal service
Every route is planned against how the business will actually operate in the UAE.
After the licence
What you may also need
The four services most founders in this situation ask about next, each on its own page.
Visas & PRO services
Residence visas for owners, staff and family, plus the MOHRE labour files, medicals and Emirates ID renewals that keep a licence and its people in good standing. A sponsored visa lasts 1, 2 or 3 years; approval stays with the authority.
→UAE bank account setup
A bank-ready file built around your ownership, activity and expected transactions, matched to the bank whose risk appetite suits your profile. The bank alone decides approval and timing.
→Accounting & tax
Monthly bookkeeping, VAT and corporate-tax filings and year-end accounts, with statutory audit signed by a registered auditor.
→Legal services
Contracts, corporate documents, disputes and regulatory matters, advised by lawyers licensed to practise in the UAE and named in the engagement letter.
→
Next decision
Related reading
Questions
Frequently asked
- Can we just amend the memorandum instead?
- Some provisions can go into the memorandum, and some must; others do not belong on a public register or are not accepted by the authority's template. The law firm advises which is which, and we file the amendments the advice calls for.
- When should we sign it?
- Ideally at formation, and in any case before an investor, a key hire with equity or a buyer appears. Once a partner notifies an LLC of a sale to an outsider, the other partners have 30 days to redeem the stake (Article 80), which leaves little time to negotiate. An agreement signed during a dispute is a settlement, not an agreement.
- Does a free-zone company need one?
- Having more than one shareholder creates the need, not the jurisdiction. Each free zone has its own articles template, transfer process and filing rules. ADGM, for example, publishes model articles and expects notice of amended articles within 14 days. The agreement has to be reconciled with whichever applies.
- What does it cost?
- The law firm quotes its own fee under its own engagement, usually fixed for a defined document; our coordination is the Velarozone service fee, itemised in your engagement letter. You will see two invoices for two different things.
- One founder is abroad. Can they sign remotely?
- The agreement itself can usually be signed remotely, as the law firm advises. A memorandum amendment is different. Onshore, Article 14(1) requires attestation by the competent authority, in person or by electronic signature as it decides, and in some cases before a notary public; otherwise the amendment is void. Free zones set their own rules. We sequence the signatures around where each founder is.
Sources
Regulations, fees, and eligibility can change. Every regulatory statement is re-checked before publication and dated above.
Legal notes and scope
Velarozone provides setup and operational-readiness coordination. This page is general information, not legal, tax, immigration, or banking advice.
General information drawn from the CBUAE Rulebook, including the Retail Payment Services and Card Schemes Regulation (C 15/2021), and Cabinet Resolution No. (134) of 2025 as published, not legal or tax advice. Rules and guidance change, so confirm the current text and each institution's own requirements before you submit.
Velarozone is not a law firm, is not licensed to practise law in the UAE and does not give legal advice. A shareholders' agreement is drafted and advised by a licensed law firm under its own engagement letter, and the firm alone is responsible for it.