UAE’s New Valuation Framework for In-Kind Contributions in Corporate Transactions

This article was first published by LexisNexis Middle East on 8 July 2026. New Valuation Framework for In-Kind Contributions in Corporate Transactions. Reprinted with permission.

Ministerial Decision No. 117/2026 introduces a new framework governing how non-cash assets, including real estate, equipment, intellectual property, and financial assets, may be contributed to the capital of UAE onshore companies. The Decision establishes a mandatory accreditation and registration regime for valuers, requires compliance with internationally recognised valuation standards, and imposes specific requirements for valuation reports. It also introduces conflict-of-interest restrictions and timing requirements that may affect transaction planning and execution. For parties involved in company formations, capital restructurings, and M&A transactions that include in-kind contributions, the new rules may become an important consideration from the outset of the transaction process.

On 3 June 2026, the UAE Minister of Economy and Tourism issued Ministerial Decision No. 117/2026 (the Decision), the principal implementing instrument establishing the standards and requirements for the valuation of in-kind contributions to company capital under Federal Decree Law No. 32/2021 concerning Commercial Companies (the CCL), as amended by Federal Decree Law No. 20/2025 (the Amendment). It introduces a mandatory accreditation and registration regime for valuers, prescribes the professional standards governing valuations, and sets out detailed procedural requirements for valuation reports.

The Decision applies to all company forms subject to the CCL, except for public joint stock companies regulated by the Securities and Commodities Authority. It applies on incorporation, capital increases and reductions, and any other transaction requiring an asset valuation under the CCL, including pursuant to Article 80, which governs the assignment of a partner's stake in an LLC to a non-partner and requires valuation of the stake where the price is in dispute.

This article considers the Decision from a practical perspective, addressing the new accreditation framework and what practitioners should verify before instructing a valuer, the substantive standards governing valuations and valuation reports, the timing constraints the Decision introduces into transaction timetabling, and the risk allocation implications for transaction documents.

Key Takeaways

The Decision gives practical effect to the use of in-kind contributions, which have become an increasingly important structuring tool in onshore UAE transactions following the Amendment. In summary:

The Decision introduces a structured, mandatory accreditation regime for valuers. Registration in a central register (the Register) maintained by the Ministry of Economy and Tourism (the Ministry) is a mandatory prerequisite for any valuation to be accepted by the relevant local licensing authority in each Emirate (the Competent Authority). Practitioners must confirm that a valuer is accredited and registered under the Decision before instructing it.
The professional standards framework, anchored in the International Valuation Standards (IVS) and the Royal Institution of Chartered Surveyors (RICS) Red Book, aligns UAE onshore practice more closely with international norms. For cross-border transactions involving in-kind contributions to onshore companies, this may help bridge the gap between the standards expected by counterparties and their advisers and those required under the domestic legal framework.
The Decision introduces timing constraints, including a six-month validity period for valuation reports and a three-month maximum age for data used in valuations. These requirements should be incorporated into transaction timetables from the outset rather than treated as closing stage mechanics.
The conflict-of-interest regime is prescriptive. A valuer is prohibited from issuing a valuation report where it has provided material services relating to the determination of value, pricing, or structuring of the same transaction to a principal party in the preceding 12 months. Where a valuation firm has had that nature of prior involvement, it will be disqualified. Identifying the right valuer early and checking its prior engagement history against this test is a substantive step, not an administrative one.
The Decision adds process and compliance requirements to in-kind contribution structures while providing greater procedural certainty for their use, including in vendor rollover structures, asset-for-share arrangements, and pre-transaction restructuring steps.

Practical Guidance

In-kind contributions, whereby non-cash assets are contributed in exchange for equity, were permissible under the previous CCL framework, but the surrounding regulatory infrastructure was limited. The Amendment strengthened the valuation and accountability framework at the level of primary legislation, and the Decision provides the detailed rules necessary to implement it.

The categories of assets capable of constituting an in-kind contribution under the Decision are broad, including real property, land and buildings, machinery, equipment and vehicles, technology systems and software, intellectual property, non-cash financial assets, inventory, and any other asset capable of financial valuation and qualifying as a proprietary right under applicable legislation (Article 5, Fourth).

Any in-kind contribution within the Decision's scope must be valued by a registered and accredited valuer applying the prescribed professional standards, and the resulting valuation report must satisfy specific form and content requirements before it will be accepted by the relevant authority. A valuation carried out by an unregistered or unaccredited valuer will not be recognized, and non-compliance may also expose the relevant parties to administrative penalties under Cabinet Decision No. 102/2022 issuing the Schedule of Administrative Penalties for acts committed in violation of the CCL.

Where the Decision Applies

The Decision applies in three scenarios (Article 2):

On incorporation where a founder or shareholder contributes non-cash assets as part of its initial capital subscription;
Capital increases or reductions, including where new or existing shareholders inject assets in exchange for equity; and
Any other transaction requiring asset valuation under the CCL, including under Article 80.

From a transactional standpoint, the most immediately relevant applications are:

Vendor rollover and share-for-asset structures in M&A transactions, where a seller receives consideration shares in an onshore company in exchange for contributed assets;
Equity issuance as consideration, where an onshore LLC or private JSC issues shares to a counterparty in exchange for non-cash value forming part of deal consideration;
Pre-transaction restructuring, including consolidation of operating assets at holding company level, internal reorganisations involving asset injections, and roll-up structures; and
Founder or management contributions of IP or other intangible assets, particularly in growth stage contexts.

Step One: Verify the Valuer

Before instructing a valuer, the following should be confirmed:

Registration and Licensing:

The valuer must be registered in the central Register maintained by the Ministry. Registration is a mandatory prerequisite and constitutes a fundamental condition for the valuer to carry out valuation activities. The Register is the sole reference point for all Competent Authorities (Article 3). A valuation carried out by an unregistered valuer will not be recognised.
The valuer must hold a licence issued by the relevant Competent Authority authorising the conduct of valuation activities.

Professional Qualifications and Experience – Natural Persons:

Where the valuer is a natural person, the Decision requires (Article 4, First):

An accredited professional qualification from an IVSC member organisation, such as RICS or ASA, or another body approved by the Ministry;
A minimum of three years of specialised experience in the field of the in-kind contribution to be valued, evidenced by an approval letter, no-objection letter, experience certificate, or official letter of recommendation from the authority responsible for the relevant sector, where applicable;
Professional liability insurance issued by a UAE-registered insurer covering liabilities arising from valuation activities and professional errors;
Compliance with continuing professional development and training requirements;
Registration with the relevant authority;
A certificate of good conduct and a clean criminal record for offences affecting integrity or involving property; and
No prior administrative sanctions affecting integrity or impartiality.

Professional Requirements – Juridical Persons:

Where a valuation firm is instructed, additional entity level requirements include (Article 4, Second):

A minimum of three years of specialised experience in the relevant asset class;
A qualified professional team and an appointed quality assurance officer;
Written policies governing independence and record retention; and
A clean criminal and administrative record at the entity level.

The individual professionals within the firm who conduct the valuation must each satisfy all the natural person requirements above.

Sector Specific Requirements:

Where the in-kind contribution has a specialist nature, additional requirements may be prescribed by the relevant Competent Authority or sectoral regulator. Those requirements take precedence over the general conditions in the Decision in the event of conflict (Article 4, First, item 11 and Article 4, Second, item 10).

Step Two: Check for Conflicts of Interest

The Decision sets out circumstances in which a valuer is expressly prohibited from issuing a valuation report (Article 5, Second). These are conditions going to the validity of the report itself:

The valuer, or any member of the valuation team, has a direct or indirect personal or financial interest in the transaction;
The valuer receives fees contingent on the valuation outcome or linked to transaction completion, meaning success-fee arrangements are not permitted;
The valuer has provided material services relating to the determination of value, pricing, or structuring of the transaction to a principal party in the preceding 12 months;
A familial relationship up to the fourth degree exists between the valuer (or any team member) and any principal party or their representatives; or
Any other circumstance that compromises or adversely affects the impartiality of the valuation.

The 12-month look-back period is particularly relevant in a transactional context. Practitioners should identify this risk at the outset, specifically by checking whether the proposed valuer has had that nature of prior involvement with the relevant transaction or parties and, where necessary, identify an alternative valuer before the relevant work commences.

Step Three: Ensure the Valuation Meets the Required Standards

The Decision mandates compliance with IVS and RICS Red Book Standards as the primary professional framework, subject to any mandatory national or sectoral controls that take precedence in the event of conflict (Article 5, Third).

IVS Requirements:

The valuer must comply with both the General Standards and Asset Standards under IVS, including:

Establishing the overall valuation framework including bases of value (Market Value, Fair Value, or Investment Value), general and special assumptions, and disclosure and transparency requirements;
Documenting and verifying data and its sources;
Applying the appropriate asset-specific standards covering real estate, plant and machinery, businesses, financial assets, and intellectual property; and
Applying the relevant valuation applications, including valuations for financial reporting, commercial transactions, financing, and collateral and security purposes.

RICS Red Book Requirements:

The valuer must comply with RICS Red Book requirements on professional conduct, terms of engagement, basis of value, valuation methodologies, report requirements, quality review, consideration of internal audit observations, and independent third-party valuation reviews where applicable.

Conduct of the Valuation:

In carrying out the valuation, the valuer must (Article 5, Fourth):

Define the purpose and scope, describe the asset, and identify the basis of value;
Select the appropriate valuation methodology (income, market, or cost approach) and provide reasons for that selection;
Ensure that data used is no more than three months old at the valuation date, unless the relevant Competent Authority prescribes a different period for a particular asset class;
Retain all records for five years;
Maintain independence and provide a Declaration of Independence; and

Obtain any necessary disclosures from relevant partners, shareholders, executive management, or the board of directors.

On Title and Encumbrances:

The valuer is permitted to rely on a declaration submitted by the contributor of the in-kind contribution confirming ownership and disclosing any restrictions, mortgages, third-party rights, or disputes relating to the asset. Responsibility for that declaration rests with the contributor. The valuer's liability does not extend to inaccuracies in the contributor's declaration, except in cases of fraud or gross negligence on the valuer's part (Article 5, Fifth, item 2).

Step Four: Manage the Validity Window

Timing Constraints:

Two timing constraints have direct implications for transaction sequencing (Article 5, First, item 7):

A valuation report will not be accepted where more than six months have elapsed from the valuation date at the time of submission to the Competent Authority, unless a different period is prescribed by the Competent Authority.
Even within the six-month window, if a material change occurs after the valuation date that affects the value of the asset, the valuation must be updated or a new report issued.

In practice:

Valuation exercises should be commissioned as close as practicable to the anticipated submission date;
Where a transaction has an extended pre-signing phase or deferred completion mechanics, the parties should include express provisions addressing the obligation to obtain an updated or replacement valuation report if the validity window expires or a material change occurs; and
The allocation of cost and responsibility for updated valuations, and any resulting delay to the transaction timetable, should be addressed expressly in the SPA or contribution agreement.

Risk Allocation in Transaction Documents

The Decision has direct implications for drafting. Key considerations include:

Representations and warranties: The contributor bears express statutory responsibility for the accuracy of its ownership declaration and disclosure of encumbrances. Transaction documents should include appropriate representations and, where warranted, indemnities covering title defects, undisclosed encumbrances, and inaccuracies in the contributor's declaration;
Conditions precedent: Where an in-kind contribution forms part of a transaction, the existence of a valid, subsisting valuation report that complies with the Decision's requirements should be a condition precedent to completion. The condition should be drafted by reference to the standards the report must satisfy, not merely its existence;
Valuation methodology alignment: Differences between the parties on the appropriate valuation approach, particularly for intangible or non-standard assets, should be resolved contractually before the valuer is instructed rather than left to be negotiated at the valuation stage; and
Updated valuation mechanics: Where there is a risk of the validity window expiring before completion, the transaction documents should address who bears responsibility for commissioning an updated report, on what timeline, and what happens if the updated valuation produces a materially different result.

Oversight, Sanctions, and the Transitional Period

The Ministry, Competent Authorities, and any other relevant authority are each empowered, within their respective jurisdictions, to review valuation reports and request supporting documents. Where there are grounds to suspect a violation, the Ministry may investigate the valuer (Article 6).

The Ministry may impose the following administrative sanctions on valuers, in coordination with the relevant Competent Authority (Article 6, item 2):

A warning;
Suspension from practising valuation activities for a period not exceeding one year;
Removal of registration from the Register; or
Referral to competent authorities where a serious violation or suspected criminal offence is identified.

Any sanction imposed must be notified by the Ministry to the relevant Competent Authority within ten working days from the date of the sanction, for the purpose of updating the Register.

Transitional Period

Valuers already operating have one calendar year from the Decision's entry into force to regularise their status. The Ministry or Competent Authority may grant temporary accreditation during this period (Article 7). Practitioners instructing valuers in the near term should confirm whether the proposed valuer is operating on a temporary or full accreditation basis, and factor that into their assessment of report validity and counterparty acceptance risk.

Conclusion

The Decision establishes a clear procedural framework for in-kind contribution structures in the UAE onshore framework. By introducing a mandatory accreditation regime, prescribing internationally recognised valuation standards, and setting out procedural requirements for valuation reports, it provides greater certainty for practitioners working with these structures, including vendor rollover arrangements, asset-for-share transactions, founder IP contributions, and pre-transaction restructuring steps involving asset injections.

The process requirements introduced by the Decision – including accreditation and registration checks, conflict-of-interest analysis, data currency requirements, and valuation validity periods – are not closing-stage mechanics. They require early engagement: identifying and verifying the valuer, agreeing the valuation methodology, and building valuation sequencing into the transaction timetable from the outset. Precision in documenting in-kind contribution mechanics in transaction agreements is equally important, particularly where equity is being issued in exchange for non-cash assets.

Legislation

Federal Decree Law No. 32/2021 concerning Commercial Companies.
Federal Decree Law No. 20/2025 amending Federal Decree Law No. 32/2021 concerning Commercial Companies.
Ministerial Decision No. 117/2026 concerning the Standards and Requirements for the Valuation of In-Kind Contributions and the Accreditation of Valuers.
Cabinet Decision No. 102/2022 issuing the Schedule of Administrative Penalties for acts committed in violation of Federal Decree Law No. 32/2021 concerning Commercial Companies.