Everything You Need to Know About Share Pledge in UAE for Business Funding

Your shares can do more than hold value, they can unlock it.

In the UAE, business shares aren’t just ownership stakes, they’re leverage. With share pledging, you can use your company’s shares as collateral to secure financing and unlock capital — without giving up control. Under UAE Central Bank guidelines, lenders may offer up to 80% of the shares’ market value as a loan, making it a powerful, low-dilution financing tool when structured right.

It’s a smart move for founders looking to fund growth, manage cash flow, or scale without dilution. And now, more UAE businesses are catching on. With Meydan Free Zone, this high-potential strategy is faster and simpler than ever — taking just 2–3 business days from submission to certification.

Here’s how share pledges in the UAE work.

Share Pledge in the UAE: What It Means and Why Businesses Use It

Think of it like this: you own shares in your company. With a share pledge, you can use those shares as collateral to raise money, without selling them.

You stay in control of your business, and your lender gets added security. If you default, they may gain rights depending on what’s in the pledge agreement. It’s a common financing move globally, and it’s gaining traction in the UAE, especially with streamlined setups like Meydan Free Zone’s.

Risks and Benefits of Pledging Shares

Factors To Consider While Pledging Share

Before you get started, check these boxes:

• MoA Check: Your company’s Memorandum of Association must clearly allow for share pledging
• Meydan Free Zone Requirements: You’ll need to submit a shareholders’ resolution using Meydan Free Zone’s official template
• Notarisation Matters: Pledge agreements and POAs must be notarised (and certified if the shareholder is a corporate)
• Follow the Law: UAE Commercial Companies Law governs how share pledges are enforced

Enforcing the UAE Share Pledge Law

Under UAE law (Article 81 of the Commercial Companies Law), if you default on your agreement, the lender can sell the pledged shares — either by mutual agreement or public auction. Before that happens, your company gets 15 days to buy them back. It’s called a right of first refusal, and it protects your interests.

It’s simple, structured, and built to keep both sides covered.

This can happen in two ways:

• By mutual agreement between both parties
• Through a public auction, if no agreement is reached

Before this happens, the lender must notify both the company and the shareholder in writing. And here’s the key part — the company has 15 days to buy back the shares before they go to someone else. This is called a right of first refusal, and it’s designed to protect everyone involved.

Bottom line? UAE law gives both lender and borrower clear, enforceable rights — and Meydan Free Zone’s structured process makes sure everything stays compliant from day one.

Documents You’ll Need for Share Pledging With Meydan Free Zone

We’ve taken the complexity out of the process — and made it clear, quick, and business-friendly. Here’s what you will need:

1. Shareholders’ Resolution — signed by all shareholders using our ready-made template
2. Pledge Agreement — signed and notarised between you and the lender
3. NOC from the Pledgee — issued by your bank or financial institution and addressed to Meydan Free Zone
4. Trade Licence — of the financial institution acting as pledgee
5. Power of Attorney (POA) — if someone else is handling this on your behalf (must be notarised, with passport copy)

It costs AED 1,000 to register your share pledge. Once all documents are in and approved, Meydan Free Zone will issue your official Share Pledge Certificate within just 2–3 business days.

If you ever need to make changes or terminate the pledge, just submit your updated resolution and pledge agreement (if needed), a release letter from the lender, and ID copies of the authorised signatories.

Share Pledge Withdrawal Made Simple

You can pull out of a share pledge, depending on what’s in your agreement and what UAE law allows. In most cases, you can walk away from a share pledge by repaying the loan, offering new collateral, coming to a mutual agreement with your lender, or simply letting the agreement expire.

In Conclusion

Your shares have value, and with a share pledge, they can also unlock real business potential.

At Meydan Free Zone, we’ve simplified the process to make it clear, compliant, and fast:

• Get started with pre-approved resolution templates
• Submit your documents and receive your certificate in 2–3 business days
• Pay a flat AED 1,000 — no hidden charges
• Stay in control of your business every step of the way

Whether you're funding growth, managing cash flow, or setting up for expansion, Meydan Free Zone makes sure the paperwork doesn’t slow you down, and that you stay protected while doing it.

FAQs

1. Is share pledging legal in UAE free zones?​

Yes. Share pledging is legally recognised in both mainland and free zones across the UAE, including Meydan Free Zone. However, each zone may have different documentation and process requirements.

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2. Will I still control my business after pledging shares?​

Yes. You remain in control unless you default. Only then can the lender act on rights outlined in the pledge agreement.

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3. Does my MoA need to mention share pledging?​

Yes. Your company’s Memorandum of Association must include a clause permitting share pledging. If it doesn’t, the pledge may not be enforceable.

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4. Who can I pledge shares to?​

You can pledge your shares to a licensed bank, financial institution, or private lender — provided the agreement is notarised and the lender issues an NOC addressed to Meydan Free Zone.

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5. How can I terminate a share pledge early?​

You can end a share pledge by repaying the loan, offering alternate collateral, or mutually agreeing with the lender — as long as the original pledge agreement allows it.

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6. Are LLC shares eligible for pledging?​

Yes. Under UAE law, LLC shares are treated as movable property and can be pledged if permitted by the MoA.

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7. What happens if the lender becomes insolvent?​

If a lender becomes insolvent, enforcing the pledge may be delayed. To reduce risk, it’s best to work with licensed and regulated financial institutions.

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8. What’s the official outcome of the share pledge process at Meydan Free Zone?​

You’ll receive a Share Pledge Certificate from Meydan Free Zone within 2–3 business days of document approval and fee payment.