It’s exciting to start a business in the UAE. The country has become a top place for investors and entrepreneurs because of its tax breaks, world-class infrastructure, and access to global markets.
A lot of founders focus on the short-term things like trade licenses, visas, and banking. But they often forget about governance, which is just as important.
A clear Shareholders' Agreement (SHA) is the first step toward good governance. The foundation of your startup will determine:
- how it will grow,
- how decisions will be made, and
- how problems will be solved.
Why Governance is Important in the UAE
There are more venture capital firms and government-backed accelerators in the UAE than ever before, which is great for startups. But growth makes things more complicated:
- More shareholders are joining the company.
- Investors want to know their rights and protections.
- Founders need a clear plan for decision-making.
Without clear governance, many startups run into problems with equity, profit distribution, or roles. These issues can stall growth and break trust.
Governance is like a manual for how your business works. Without it, you’re improvising. With it, you’re scaling strategically.
What is a Shareholders' Agreement (SHA)?
A Shareholders' Agreement is a legal document that all shareholders must sign. It goes beyond the Articles of Association and ensures that everyone knows their rights, duties, and limits.
Important Parts of a SHA:
- Equity Ownership: Who owns what, and what happens if someone wants to sell?
- Voting Rights: How choices are made majority, supermajority, or unanimous.
- Roles and Responsibilities: Each shareholder’s contribution in terms of time, money, or expertise.
- Profit Distribution: How and when dividends are paid.
- Exit Clauses: What happens if a shareholder leaves, or if the company is sold?
- Dispute Resolution: Mediation and arbitration are key in the UAE, where teams are often multinational.
Governance Outside of the SHA
1. Board of Directors
- Even small startups benefit from a formal board that sets strategy and monitors performance.
- Independent advisors also add credibility with investors.
2. Compliance and Reporting
- The UAE has strict rules for accounting, auditing, and taxes (corporate tax and VAT).
- Good governance ensures deadlines are met and liabilities are avoided.
3. Jobs and Rewards
- Clear employment contracts, stock option plans, and performance policies help attract and retain talent.
4. Data Privacy and IP Ownership
- As digital businesses grow, it becomes critical to protect intellectual property and comply with UAE data laws.
Mistakes That New Businesses Make
- Handshake deals: Trusting without legal documentation.
- Ignoring minority rights: Small shareholders often feel left out, creating disputes.
- No exit strategy: Founders forget to plan what happens if one partner wants to leave.
- Copy-paste agreements: Using templates that don’t reflect UAE’s legal environment.
Vyssor's Viewpoint
At Vyssor, we’ve seen even the best startups get stuck without good governance. That’s why we encourage founders to think beyond just incorporation.
We help our clients:
- Draft Shareholders' Agreements aligned with UAE law.
- Build governance structures that match their growth stage.
- Navigate compliance needs such as VAT filings and annual audits.
- Design incentive structures that keep both founders and investors engaged.
When you start a business with Vyssor, you don’t just get a trade license. You lay the groundwork for long-term, sustainable growth.
Contact us today and let Vyssor help you set up strong governance structures so you can focus on scaling your UAE business with confidence.
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