A broad-ranging, multinational view of domestic governments’ powers to control and block foreign investment. Expert local insight in jurisdictions worldwide, covering: an overview of law and policy towards oversight of foreign investment, powers of the regulators to intervene on national interest grounds and threshold issues, procedure: notification and filing submissions, timelines for clearance, regulatory guidance, lobbying, assessment: tests for clearance, interagency and international consultation, remedies and appeals and detailed analysis of recent leading case law.
Over the past few years, the United Arab Emirates has witnessed an increase in awareness and significance of environmental, social and governance (ESG) issues. While businesses in the UAE have begun to acknowledge that conscious efforts towards ESG compliance is imperative for growth and longevity of their business, the question remains whether ESG compliance can truly be said to now form a part of the UAE compliance ecosystem.
ESG significance on the rise: Key Factors
M&A has been on a steady rise in the MENA region (with the UAE continuing to demonstrate resilience despite global headwinds). ESG compliance has become a point of concern for investors, who are frequently concerned to fully investigate and understand the nature and extent of ESG compliance by UAE targets.
In cases where such compliance can be successfully demonstrated, investors derive comfort regarding sustainable financial performance and the ability of the management to identify and account for long term business risks. On the other hand, a lack of transparency concerning ESG compliance often results in questions regarding the sustainability of the business and management’s lack of sensitivity to an issue that is increasingly important to investors and stakeholders.
As a consequence, ESG rating agencies are often engaged by potential investors for the purposes of conducting an ESG diligence which has led to the “ESG Score/Ratings” becoming increasingly significant in evaluating, and to an extent negotiating certain contours of an investment. In most cases, the ESG score/rating will have a direct impact on the valuation of a target.
Good-to-have or must-have: Where do we stand?
While the UAE business ecosystem awaits further and more granular regulation of ESG matters, the question arises whether UAE businesses should of their own initiative, take cognizance of an issue that is now at the core of many investment mandates. Improved capability of risk management, higher brand value, advantage over non-compliant competitors and potentially reduced business costs resulting in higher valuation are only a few of the factors that influence the decision-making process. ■
This report is produced by the Lex Mundi Cross-Border Transactions (CBT) Group. The CBT Group provides access to the experienced, top-tier legal advice clients require to expand their operations and investments into global markets. The report sets out Lex Mundi’s member firms’ insights and predictions for 2023 in respect of mergers and acquisitions (M&A), including key concerns facing M&A practitioners across various regions (including the Middle East and Africa, Asia and the pacific, Europe, North America, Latin America and the Caribbean) and a look back and look forward on deal activity by market segment and sector.
In this video inBrief, Abdus Samad discusses Merger Control in the United Arab Emirates.
Disclaimer: Afridi & Angell’s video inBriefs provide a brief overview and commentary on recent legal announcements and developments. Comments and opinions contained in the video and description are general information only. They should not be regarded or relied upon as legal advice.
The Mergers & Acquisitions Review provides a practical overview of global M&A activity and the legal and regulatory frameworks governing M&A transactions in major jurisdictions worldwide. With a focus on recent developments and trends, it examines key issues including relevant competition, tax and employment law considerations; financing; due diligence; and much more.
This article looks into the method of structuring an M&A transaction in the UAE where the buyer acquires the assets and liabilities of the target company (or in certain instances, the assets and liabilities of a certain business segment operated by the target company).
Abdus Samad of Afridi & Angell examines the key provisions of the Competition Law and their effect on M&A transactions in the UAE.