01The short answer
Start by valuing the company, then read the Memorandum of Association to see what the particular shares entitle their owner to. Profit-sharing arrangements, management rights, pre-emption provisions and partner loan and current account balances can all make an interest worth more or less than its percentage of the company.
02What the MoA tells the valuer
Key provisions include:
- How profits are distributed, which may differ from shareholding percentages
- Who appoints the manager and which decisions need special majorities
- Pre-emption rights giving other partners first refusal on a transfer
- Any valuation mechanism for a departing partner
03After the ownership reforms
Since most mainland activities can now be fully foreign-owned, many LLCs have restructured away from earlier nominee or sponsor arrangements. Where historic side agreements exist, the valuation reflects the economic interest as documented, and the assumptions are stated. Legal questions about those arrangements are for your lawyers.
04Minority interests
Whether a minority interest is worth less than its pro rata share depends on the basis of value and the documents. A transfer to a third party at market value may reflect the lack of control; a buyout under an agreement that requires a pro rata value will not.
This article explains general principles for UAE readers. Your own valuation will depend on your company, its documents and why the figure is needed, so speak to us before relying on it.