Draft Joint Venture Agreement in the UAE

A joint venture agreement establishes the terms on which two or more businesses or investors collaborate on a specific commercial opportunity, project, or business activity. It should define what each party will contribute, how decisions will be made, how revenue and costs will be allocated, and what happens when the joint venture ends.

Joint ventures in the UAE can be structured in different ways. The parties may establish a separate company, invest together in an existing entity, or cooperate through a contractual arrangement without creating a new company.

The appropriate structure depends on the commercial objective, required licences, ownership arrangements, liability exposure, funding requirements, and the degree of operational integration between the parties.

Abdulrahman Alshaali Advocates & Legal Consultants assists businesses, investors, and entrepreneurs with preparing and reviewing joint venture agreements under UAE law.

Joint Venture Agreements Under UAE Law

Federal Decree-Law No. 32 of 2021 on Commercial Companies, as amended, provides the principal federal framework governing companies established within its scope in the UAE.

Federal Decree-Law No. 25 of 2025 Promulgating the Civil Transactions Law provides the general contractual framework relevant to agreements between joint venture participants.

A joint venture should therefore be structured according to the legal arrangement the parties actually intend to create.

For example, if two businesses establish a new limited liability company to operate the project, the corporate relationship must comply with the requirements governing that company.

If the parties instead enter into a contractual collaboration while remaining legally separate, the agreement should define their respective contractual responsibilities clearly.

The expression “joint venture” does not itself determine the legal form of the arrangement.

The parties should identify the structure before drafting the operational and financial provisions.

Companies established in the Dubai International Financial Centre, Abu Dhabi Global Market, or other free zones may also be subject to separate corporate frameworks.

Choosing Between a Contractual and Corporate Joint Venture

One of the first decisions is whether the parties will establish a separate entity.

Contractual Joint Venture

Under a contractual joint venture, the participants remain separate legal entities and agree to collaborate through a contract.

The agreement may allocate responsibilities for financing, personnel, equipment, customer relationships, and project performance.

This structure may be suitable for a defined project where the parties do not require a permanent jointly owned company.

However, the parties should consider licensing, regulatory, tax, liability, and contracting implications before relying on a purely contractual model.

Corporate Joint Venture

A corporate joint venture involves establishing or using a separate company owned by the participants.

The company then carries on the agreed business activities through its own corporate structure.

In this case, the parties may require both a joint venture agreement and appropriate constitutional or shareholder documentation.

A Draft Shareholders Agreement may therefore operate alongside the joint venture agreement where the participants become shareholders in a dedicated company.

The corporate documents should reflect the agreed ownership and governance arrangements rather than leaving important rights only in a separate private agreement.

Defining the Purpose and Scope of the Joint Venture

The agreement should establish precisely why the parties are collaborating.

A broad statement that the parties will “work together on business opportunities” may create uncertainty about which projects fall within the arrangement.

The joint venture purpose may involve:

• Developing a specific real estate or infrastructure project.
• Entering a new market.
• Manufacturing or distributing products.
• Combining technology and commercial expertise.
• Providing services jointly.
• Bidding for a particular contract.
• Developing intellectual property.
• Operating a jointly owned business.

For example, one company may have technical expertise while another has an established UAE distribution network.

The joint venture agreement should identify the products, territory, and activities covered by the collaboration.

It should also clarify whether the parties may pursue unrelated opportunities independently.

Defining the scope can help prevent later disputes about whether a commercial opportunity belongs to the joint venture or to one participant individually.

Identifying Each Party’s Contributions

Joint venture participants may contribute different resources.

These contributions can include:

• Cash.
• Equipment.
• Intellectual property.
• Personnel.
• Technology.
• Business premises.
• Existing customer relationships.
• Distribution networks.
• Management expertise.

The agreement should identify the nature and value of each contribution where relevant.

For example, Company A may contribute AED 5 million in funding while Company B provides proprietary technology and technical personnel.

The parties should determine how non-cash contributions will be valued.

They should also establish when each contribution must be provided and what happens if a party fails to contribute as agreed.

Where contributions are made to a jointly owned company, the corporate documentation and official records should correspond with the agreed structure.

Where intellectual property is provided only for use during the project, the agreement should distinguish a licence from a transfer of ownership.

Ownership Percentages in a Corporate Joint Venture

Where the joint venture operates through a company, the participants should establish the ownership structure.

Ownership percentages may be influenced by:

• Capital contributions.
• Intellectual property.
• Existing business assets.
• Commercial relationships.
• Future funding commitments.
• Negotiated strategic value.

The agreement should correspond with the company’s constitutional documents and registered ownership position.

For example, the parties may agree on a 60/40 ownership structure.

That arrangement should be properly reflected through the corporate formation or transfer procedures rather than remaining only in the joint venture agreement.

The parties should also consider whether ownership percentages correspond with voting rights and profit entitlements or whether legally permissible differentiated arrangements are intended.

Any special rights should be implemented through the appropriate corporate framework.

Governance and Management of the Joint Venture

The agreement should establish how the joint venture will be managed.

Where a separate company is created, the parties may agree on management nomination rights and decision-making procedures, subject to applicable company law.

Relevant matters may include:

• Appointment of managers.
• Management responsibilities.
• Reporting procedures.
• Approval limits.
• Meetings.
• Voting rights.
• Removal and replacement of managers.

For example, one participant may have the right to nominate the general manager while the other nominates the finance manager.

The agreement should distinguish appointment rights from the formal corporate procedures required to implement those appointments.

The parties should also consider how management decisions will be made where their ownership interests are equal.

A governance system that requires unanimous approval for every operational matter can make the joint venture difficult to manage.

Reserved Matters Requiring Joint Approval

The parties may identify important decisions requiring approval from both participants or an enhanced voting threshold.

These can include:

• Changes to the business plan.
• Significant borrowing.
• Issuing additional ownership interests.
• Entering new markets.
• Selling major assets.
• Changing key management.
• Entering related-party transactions.
• Acquiring another company.
• Disposing of important intellectual property.
• Approving substantial capital expenditure.

Reserved matters should focus on decisions that materially affect the joint venture.

Routine operational matters can ordinarily be delegated to management within agreed limits.

For example, the joint venture manager may have authority to approve ordinary supplier contracts but require participant approval before obtaining major financing.

The contractual approval system must also remain consistent with the statutory decision-making requirements applicable to any jointly owned company.

Preparing the Joint Venture Business Plan

A joint venture agreement may incorporate or refer to an agreed business plan.

The business plan can help establish the commercial assumptions on which the parties are collaborating.

It may address:

• Revenue targets.
• Capital expenditure.
• Staffing.
• Expansion.
• Marketing.
• Product development.
• Financing requirements.
• Project milestones.

The parties should determine which parts of the plan create binding obligations and which are forecasts or commercial objectives.

For example, an expected sales figure may be a target rather than a guaranteed contractual result.

The agreement should avoid treating every projection as a legally binding commitment unless that is the parties’ intention.

The process for approving future business plans and budgets should also be addressed.

A joint venture operating for several years will usually require periodic updates rather than relying indefinitely on the original plan.

Funding the Joint Venture

The parties should establish how the joint venture will obtain the funds required to operate.

Funding may come from:

• Initial capital contributions.
• Additional equity.
• Shareholder or participant loans.
• Bank financing.
• Third-party investment.
• Operating revenue.

The agreement should address what happens if additional funding is required.

For example, the parties may initially contribute AED 10 million but later discover that another AED 3 million is needed to complete the project.

One participant may be willing to contribute while the other is not.

The agreement should establish how additional funding proposals will be approved and the consequences of unequal participation.

Where funding is structured as debt, a draft loan agreement or separate financing documentation may be appropriate.

The parties should avoid leaving future funding entirely unresolved where the business is likely to require substantial additional capital.

Allocation of Profits, Revenue, and Losses

The joint venture agreement should establish how financial results will be allocated.

Where a separate company is used, distributions must comply with the corporate framework governing that company.

In a contractual joint venture, the agreement should define how revenues, expenses, and financial obligations are allocated between participants.

The parties should distinguish:

• Ownership percentage.
• Revenue allocation.
• Profit distribution.
• Responsibility for operating expenses.
• Responsibility for project losses.

These concepts are not necessarily identical.

For example, two parties may own a company equally but agree on commercially different arrangements concerning fees or services supplied separately to the joint venture.

Related-party payments should be documented transparently.

The parties should also determine whether profits will be distributed immediately or retained to finance future operations.

Accounting and Financial Reporting

Joint venture participants should have access to sufficient financial information to understand the performance of the business.

The agreement may establish requirements concerning:

• Accounting records.
• Budgets.
• Financial statements.
• Bank accounts.
• Audit procedures.
• Expense approvals.
• Management reports.

For example, both participants may require monthly management accounts and annual audited financial statements.

Where the joint venture operates through a separate company, applicable statutory accounting and audit requirements must also be followed.

The agreement may provide additional reporting rights beyond statutory minimums.

It should also establish who controls bank accounts and which transactions require multiple approvals.

Financial reporting can be particularly important where one party manages daily operations while the other is primarily an investor.

Employees and Personnel Provided by the Parties

A joint venture may rely on personnel from one or both participants.

The agreement should distinguish employees of the joint venture from employees temporarily provided by a participant.

Relevant matters can include:

• Who employs each person.
• Who pays salary and benefits.
• Who supervises the work.
• Whether costs are reimbursed.
• Confidentiality.
• Intellectual property.
• Replacement of key personnel.

For example, Company A may provide engineers to the joint venture for its first year.

The agreement should establish whether those engineers remain employees of Company A and how their costs are allocated.

Where the joint venture hires employees directly, employment arrangements should comply with the applicable UAE labour framework.

The participants should avoid informal personnel arrangements that make responsibility for wages, visas, or employment obligations unclear.

Intellectual Property Contributed to the Joint Venture

Intellectual property can be central to a joint venture.

A participant may contribute:

• Technology.
• Software.
• Trademarks.
• Designs.
• Patents.
• Proprietary processes.
• Technical know-how.

The agreement should establish whether the joint venture receives ownership or only a licence to use the intellectual property.

For example, a technology company may allow the joint venture to use its existing software while retaining ownership.

The agreement should then define the scope and duration of that licence.

The parties should also consider ownership of new intellectual property created during the venture.

A new product developed jointly may raise questions about:

• Ownership.
• Registration.
• Commercialisation.
• Use after termination.
• Licensing outside the joint venture.

These issues should be addressed before valuable intellectual property is created.

Confidentiality Between Joint Venture Participants

Joint venture participants often gain extensive access to each other’s commercially sensitive information.

This can include:

• Customer information.
• Technical data.
• Pricing.
• Business plans.
• Financial information.
• Supplier relationships.
• Proprietary processes.

The agreement should establish how such information may be used.

A Draft Confidentiality Agreement or draft nda agreement may also be appropriate, particularly where confidential information must be exchanged before the joint venture is finalised.

The parties should distinguish information belonging to an individual participant from information generated by the joint venture itself.

They should also determine which confidentiality obligations continue after the collaboration ends.

The agreement should not allow one participant to use the joint venture as a means of obtaining sensitive information for an unrelated competing business.

Existing Businesses and Competition Between the Participants

Joint venture participants may continue operating their own businesses.

The agreement should establish whether they remain free to undertake activities that overlap with the joint venture.

For example, two construction companies may collaborate on one major infrastructure project while continuing to compete for unrelated projects.

The joint venture agreement should identify any restrictions that are genuinely necessary.

These may concern:

• The defined project.
• Particular customers.
• Specific territory.
• Confidential information.
• Opportunities developed through the joint venture.

A broad prohibition preventing each party from conducting its existing business may be commercially inappropriate.

Where non-compete restrictions are contemplated, their scope should be assessed under the applicable legal framework.

A Non-Compete Agreement Draft may require separate consideration where substantial competitive restrictions are involved.

Business Opportunities Belonging to the Joint Venture

A significant source of disagreement can arise when one participant independently pursues an opportunity connected to the joint venture.

The agreement may therefore establish how joint venture opportunities are identified.

For example, the parties may collaborate to distribute a particular product in the UAE.

One participant later receives a direct approach from a major customer requesting a related transaction.

The agreement should help determine whether that opportunity belongs to the joint venture or may be pursued independently.

The drafting may define relevant:

• Products.
• Customers.
• Territory.
• Projects.
• Business activities.

The agreement should avoid an unlimited provision capturing every future opportunity of either participant.

The definition should correspond to the actual purpose of the collaboration.

Related-Party Transactions

A participant may also supply goods or services to the joint venture.

For example, one shareholder may provide logistics services while the other supplies technology.

These transactions can create conflicts of interest.

The agreement should establish how related-party arrangements are approved and priced.

Possible requirements may include:

• Disclosure.
• Approval by the non-interested participant.
• Agreed pricing procedures.
• Documentation of services.
• Periodic review.

The purpose is not necessarily to prohibit transactions with participants or their affiliates.

Such arrangements may be commercially beneficial.

However, the parties should establish procedures that prevent one participant from using its management position to obtain unapproved benefits from the joint venture.

Licensing and Regulatory Responsibility

The joint venture may require licences or government approvals before beginning operations.

The agreement should identify responsibility for obtaining them.

Depending on the business, required approvals may relate to:

• Company licensing.
• Professional activities.
• Product registration.
• Construction.
• Financial services.
• Healthcare.
• Import and distribution.
• Other regulated sectors.

For example, one participant may have industry expertise while the other has experience obtaining UAE regulatory approvals.

The agreement may allocate responsibilities accordingly.

However, the parties should not assume that one participant’s existing licence automatically authorises a separate joint venture entity to conduct the same activities.

The licensing position of the actual operating entity should be verified.

Contracting with Customers and Third Parties

The parties should establish who will enter contracts with customers and suppliers.

In a corporate joint venture, the joint venture company may contract in its own name.

In a contractual collaboration, one participant may act as the principal contracting party.

This distinction affects:

• Revenue collection.
• Liability.
• Customer claims.
• Payment obligations.
• Contract administration.

For example, two companies may jointly bid for a project but agree that only Company A will sign the customer contract.

The joint venture agreement should establish how Company B will perform its share of the work and receive payment.

The parties should also determine who bears the consequences if the customer fails to pay.

Contractual responsibility should not be left unclear merely because both companies participated in winning the project.

Deadlock Between Joint Venture Participants

Deadlock is particularly important where the parties hold equal interests.

A 50/50 joint venture may be unable to make significant decisions if the participants disagree.

The agreement should define what constitutes a deadlock.

An ordinary disagreement over routine operations should not necessarily trigger the same process as a prolonged inability to approve a critical business decision.

A staged procedure may involve:

• Management discussions.
• Escalation to senior representatives.
• A defined negotiation period.
• Mediation or another agreed process.
• A legally appropriate exit mechanism.

For example, the participants may disagree about whether to invest another AED 5 million in expansion.

If the business cannot proceed without a decision, a continuing deadlock may become commercially damaging.

The agreement should establish a mechanism before such circumstances occur.

Transfer of Joint Venture Interests

A participant may eventually wish to sell its ownership or economic interest.

The agreement should establish the applicable transfer process.

Depending on the structure, this may involve:

• Prior approval.
• Pre-emption rights.
• Permitted transfers to affiliates.
• Rights of first refusal.
• Tag-along rights.
• Drag-along rights.
• Valuation procedures.

Where a company owns the joint venture assets, corporate transfer requirements must also be satisfied.

A contractual right to transfer should not be assumed to complete the legal transfer automatically.

Federal company law and the constitutional documents may require additional procedures.

The agreement should coordinate commercial exit rights with the formal requirements governing ownership.

Exit Arrangements

Joint ventures are not always intended to continue indefinitely.

The parties should consider how the relationship may end.

Potential exit events include:

• Completion of the project.
• Expiry of the agreed term.
• Sale of the joint venture.
• Transfer by one participant.
• Material breach.
• Deadlock.
• Regulatory changes.
• Failure of the commercial project.

The agreement should address the consequences of exit.

These may include:

• Valuation.
• Transfer of ownership.
• Distribution of assets.
• Outstanding liabilities.
• Customer contracts.
• Employees.
• Intellectual property.
• Confidential information.

A joint venture should not be created without considering how it can eventually be unwound.

Exit provisions are particularly important where both participants contribute valuable assets that may need to be separated later.

Termination of a Contractual Joint Venture

Where no separate company has been created, termination principally affects the contractual collaboration between the participants.

The agreement should establish what happens to ongoing projects and obligations.

For example, the parties may have outstanding customer contracts when their joint venture agreement ends.

The agreement should identify who will:

• Complete existing work.
• Collect outstanding payments.
• Pay suppliers.
• Deal with warranties.
• Retain project records.
• Communicate with customers.

Termination should not automatically leave third-party obligations unresolved.

The participants should distinguish the end of their internal collaboration from obligations already undertaken toward customers, suppliers, employees, or regulators.

A Practical Example: Equal Owners Without a Deadlock Procedure

Consider two UAE companies forming an LLC to develop and operate a new technology platform.

Each owns 50%.

Company A contributes most of the technology, while Company B provides funding and market access.

After two years, the joint venture requires substantial additional financing.

Company A wants to raise funds from an external investor.

Company B wants the existing shareholders to provide the capital themselves.

Neither proposal receives the required approval.

The company cannot proceed with its expansion and begins losing commercial opportunities.

A properly drafted joint venture agreement could have defined funding procedures and established a deadlock mechanism for major decisions.

The participants could also have agreed in advance on how an external investment proposal would be considered.

The example illustrates why equal ownership requires careful governance rather than relying solely on the expectation that the parties will continue to agree.

Documents Required to Draft a Joint Venture Agreement

The required documentation depends on the structure and purpose of the venture.

Relevant materials may include:

• Corporate documents of each participant.
• Trade licences.
• Proposed ownership structure.
• Business plan.
• Financial projections.
• Details of capital contributions.
• Intellectual property information.
• Project contracts.
• Regulatory requirements.
• Existing customer or supplier arrangements.
• Proposed management structure.
• Funding requirements.
• Term sheets or memoranda of understanding.
• Existing confidentiality agreements.

For a corporate joint venture, proposed constitutional documents should also be reviewed.

Where one participant contributes existing contractual rights or assets, the parties should determine whether third-party consent is required before those rights can be transferred or used.

Joint Venture Agreement Drafting Assistance from Abdulrahman Alshaali Advocates & Legal Consultants

A joint venture agreement should establish how the participants will contribute resources, make decisions, fund the business, share financial results, and eventually exit the arrangement.

Abdulrahman Alshaali Advocates & Legal Consultants assists UAE and international businesses, investors, and entrepreneurs with preparing and reviewing joint venture agreements.

Our services may include structuring contributions, developing governance provisions, reviewing funding arrangements, addressing intellectual property and confidentiality, and preparing transfer and exit provisions.

Where the participants establish a jointly owned company, a Draft Shareholders Agreement may also be required.

Where one party is primarily providing capital rather than participating in a collaborative venture, a Draft Investment Agreement may provide a more appropriate structure.

Clients seeking wider contractual assistance can explore our contract drafting services.

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Request Assistance with Your Draft Joint Venture Agreement

Whether you are forming a jointly owned company, collaborating on a specific project, entering a new market with another business, or combining capital and expertise for a commercial venture, the agreement should establish how the relationship will operate from formation through exit.

Abdulrahman Alshaali Advocates & Legal Consultants assists clients with preparing and reviewing joint venture agreements under UAE law.

Contact our team to discuss your proposed joint venture structure and contractual requirements.

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Frequently Asked Questions

Does a Joint Venture in the UAE Always Require a New Company?

No. A joint venture may be structured through a separate company or through a contractual collaboration, depending on the transaction.

The appropriate structure depends on matters such as licensing, liability, ownership, funding, and the way the parties intend to conduct business.

The legal structure should be determined before operations begin.

Can One Joint Venture Partner Contribute Services Instead of Cash?

The parties may allocate different contributions depending on the structure of the venture.

One participant may provide funding while another provides technology, personnel, equipment, or commercial expertise.

Where a separate company is involved, the treatment of contributions must comply with the rules governing that entity.

The agreement should also establish how non-cash contributions are valued.

Can a Joint Venture Be Limited to One Project?

Yes. A joint venture may be established specifically for a defined project.

The agreement should identify the project and establish what happens once the work is completed, including treatment of outstanding payments, liabilities, records, intellectual property, and other remaining obligations.

A project-specific structure can help prevent the collaboration from extending unintentionally into unrelated business activities.

Can Joint Venture Partners Continue Competing Outside the Venture?

They may be able to do so depending on the agreement and applicable law.

The parties should define whether any competitive restrictions apply and ensure that those restrictions correspond to the legitimate scope of the venture.

Where both participants have established businesses, the agreement should avoid unintentionally prohibiting activities that the parties intended to continue independently.

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Sources

Federal Decree-Law No. 32 of 2021 on Commercial Companies.

UAE Legislation Platform – Official Legislation

Federal Decree-Law No. 25 of 2025 Promulgating the Civil Transactions Law.

UAE Legislation Platform – Official Legislation