Nominee Shareholders in Dubai: How to Protect Privacy & Retain Control of Your UAE Company

Imagine the following situation:

• You have a UAE company

• One or more of the shareholders want to remain anonymous

How do you make sure the "real" shareholder or ultimate beneficial owner remains anonymous while also being protected and retaining control over the business?

Nominee arrangements have been common in the UAE for many years. Prior to 2020, mainland companies were required to have a UAE national hold at least 51% of the shares.

Foreign investors who wished to maintain full control often entered into arrangements where an Emirati shareholder held the majority stake on paper, but had no real decision-making power or economic interest, in other words, they served as a nominee shareholder.

Since 2020, foreign investors are permitted to own 100% of most mainland businesses, so these legacy structures are no longer needed. However, similar nominee mechanisms remain widely used today by investors who wish to maintain privacy and shareholder anonymity.

There are several legal instruments and methods that can be used to establish a robust nominee shareholder structure:

Here are the most common structuring options:

1. Nominee / Beneficial Ownership Agreement

• A private contract between the registered shareholder and the hidden (beneficial) owner.

• States that:

  • The nominee holds the shares on behalf of the beneficial owner.

  • The beneficial owner retains all economic rights (dividends, sale proceeds, etc.).

  • The nominee acts only upon instructions from the beneficial owner.

  • Includes confidentiality, dispute resolution (often arbitration in DIFC or ADGM), and termination clauses.

Pros: Simple, flexible, private.

Cons: This is an entirely private agreement, and is not recorded by the free zone or Dubai Economic Department (DED) where your company is registered.

• Enforceability depends on the quality of drafting and governing law (often DIFC or ADGM is used for enforceability).

• Most free zones and all banks require you to disclose any nominee agreement (and thus UBO info), limiting the purpose of any nominee agreement

• Nominee agreements cannot easily be notarized in the UAE

2. Share Pledge

How it Works:

• The nominee shareholder may "pledge" shares to the hidden beneficial owner in a "share pledge agreement"

• However, for this to work, the "hidden" owner has to provide something in return. Typically, this is a loan paid to the nominee.

• Specifically, the hidden beneficial owner lends funds to the nominee. The nominee uses those funds to purchase the hidden owner's shares (= paid-in capital for a newly established company). The nominee then pledges the shares as collateral (including voting rights and dividend rights) to the hidden owner.

  • The funds/loan amount are paid directly by the hidden owner into the company's bank account as paid-in capital for the shares

• This agreement can be set up for a maximum period of 99 years, or until the nominee repays the "loan".

The Agreements:

A share pledge typically uses the following contracts:

• Required: A Standard Loan Agreement, which states the amount (in AED/USD) that the hidden owner "loans" to the nominee for the shares

  • The loan agreement typically prohibits repayment of the loan within the 99y period (otherwise the nominee could keep the shares)

• Required: The Share Pledge/Mortgage Agreement assigns shares (including dividend and voting rights) to the "hidden owner" as collateral for the loan

• Optional: A Share Options Agreement allows the "hidden owner" to repossess the shares or appoint a new nominee at any time

Signing

• The agreements may be signed privately or in front of witnesses.

• The pledge agreement may also be notarized via Dubai Courts (Ministry of Justice), as explained here.

• In addition, you may (optionally) register the pledge agreement depending on where your company is registered:

  • Internet City, Media City, Knowledge City and Dubai Design District:

    • Register the pledge via the Dubai Development Authority (DDA)

    • Not publicly searchable

  • Mainland companies:

    • Register the pledge via the Emirates Movable Collateral Registry (EMCR)

    • Publicly searchable

    • For mainland companies, a share pledge is often referred to as a Share Mortgage Agreement

  • Any other free zones typically use their own private registration systems:

    • Meydan

    • DIFC

    • ADGM

    • and many others

Pros: Provides legal security to the hidden owner

Cons: Does not make the hidden party a shareholder; only gives collateral control. The nominee has to cooperate with the hidden owner regarding decision-making (banking, ownership changes etc.).

3. Power of Attorney (POA)

How it Works:

• The nominee grants the beneficial owner (or their representative) a POA to exercise shareholder rights — banking, voting, transfer, dividends, etc.

• A POA is considered an "enforceable deed" according to UAE law. To be legally valid, it requires notarization by Dubai Courts (Ministry of Justice).

• A POA can have an unlimited validity period; however:

  • Rarely, some institutions (such as banks) may want to see a time-limited POA

  • Even unlimited-time POAs can be revoked through a "Revocation of POA" declaration

  • To make a POA practically "irrevocable", it has to be used in combination with a share pledge

Pros: Allows practical control. The "hidden owner" will be able to make administrative changes to the company without the nominee shareholder's involvement.

Cons: POA's should ideally be used in conjunction with other agreements. Otherwise, POA's can easily be cancelled

4. Board Resolution / Side Letter

• Can be used internally to recognize the beneficial owner’s rights (e.g. board minutes noting that the nominee holds on behalf of someone).

• Only supportive, not sufficient on its own. Difficult to enforce in front of a court.

5. Declaration of Trust

• Common in other common-law jurisdictions (e.g. BVI, UK).

• The nominee signs a declaration of trust stating they hold shares “in trust” for the beneficial owner.

Pros: Legally cleaner if DIFC/ADGM law applies. DIFC and ADGM are free zones in the UAE operating based on English common law.

Cons: UAE mainland law (and free zones other than DIFC/ADGM) don't recognize trusts well; if you use it, it’s better to apply DIFC law and arbitration.

Frequently Asked Questions on Nominee Shareholder Agreements in Dubai and the UAE

Who controls the business' bank account?

When you open a UAE company, you will specify an "authorized signatory" in the company incorporation documents (usually the MOA or AOA).

This authorized signatory has the sole right to open/manage and close bank accounts in the name of the company. The authorized signatory should also have another role in the company, usually one of the following:

• Be a general manager OR

• Be a director OR

• Be a shareholder

If you want someone else to have banking rights (i.e., a hidden shareholder), then the authorised signatory will have to provide them with a POA. We explain POAs here.

The "hidden shareholder" can have full, exclusive control over a bank account by being an authorized signatory.

Does the "Hidden Shareholder" have to report their share ownership to governments and banks?

This depends on the country where the hidden owner resides.

Due to international KYC (Know-Your-Customer) regulations, all banks will ask for ultimate beneficial owner (UBO) info. If you do not own shares according to any share registry - you do not have to report your ownership.

However, some countries, such as the United States and many European countries, classify anyone as a UBO if they retain effective control over a company, even if they officially do not own shares.

In that case, officially, the hidden shareholder is supposed to report their "control" to local government and tax authorities.

In practice, it is easy to circumvent such rules – especially if the "hidden owner" does not control the business' bank account.

Nominee agreements are private and not publicly searchable or accessible.

How/where do you find a nominee shareholder?

There are multiple options to get a nominee shareholder in Dubai and the UAE

1. You may appoint any acquaintance as a nominee shareholder. However, please keep in mind the following:

   1. The nominee shareholder should ideally reside in the UAE, and have a UAE visa and Emirates ID. If this is not the case, the UAE-registered company may be subject to taxation in whatever country the nominee lives in.

2. You may hire a nominee shareholder for an annual fee, usually starting at around 5,000USD/year. These annual fees compensate the nominee shareholder for the risk in being a nominee. For example, if the "hidden" shareholder abandons the company, the nominee is legally responsible to pay for business licence renewals or liquidate the company, which can become costly.

   1. The Dubai Navigator offers nominee shareholder services. Contact us for details.