Can a L.L.C. of another Emirate open branch in Dubai?
Yes, but if the capital of the company is less than Dhs. 300,000/- then it should be raised to Dhs. 300,000/- by an amendment to the Memorandum of Association. The original and the amendment to the Memorandum of Association along with other documents have to be filed with the Department of Economic Development, Dubai.
Can a sole proprietorship/partnership company be converted into a L.L.C.?
Minimum two and maximum fifty persons can form a limited liability company. However, U.A.E. National's share in the capital should be minimum 51%; at any given time share of the U.A.E. National partner should not fall below 51%. Partners may be natural persons or a corporate body/company. Each partner shall be responsible only to the extent of his share in the capital for the company’s liabilities.
The company will have to incorporate a new company in other emirates with the required capital and with a new Memorandum of Association stating therein that this new company is a branch of the Dubai Company.
What documents are required to make an application?
List of Required Documents:
Please check the list of requisite documents before submitting your application – it will minimize chances of rejection of your Visa Application due to incorrect or inadequate documents!
General requirements: If the first destination is Italy, Germany or France.
It is advisable to check the status after the average of the processing time (1 – 4 weeks).
If the visa is issued:
a) Courier Case: your passport will be delivered at the address provided by you. You need to hand over stamped photocopy of the data page to the courier person to get the delivery.
b) Non-Courier Case: you will be able to collect your passport from the Dubai Business Advisors where you submitted your application, between 15.00 hrs – 17.00 hrs.
If the visa is refused
Passport & other documents will be handed over to you at the Dubai Business Advisors, where you applied.
Visa fees / DBA Service Charges, once paid, are non refundable
In case of organized tourist trips, an accredited travel agency may submit the visa application
In case of group travel – other than organized tourist trip - , the application may be submitted by a representative sufficiently authorized.
Schengen visa applications have to be submitted at the representation of the country which is the main destination of the visit. (If visiting several states with stays of approximately the same duration, the consulate responsible for issuing the visa is that of the country of the first entry into the Schengen area.)
Practical example: If you wish to travel around Europe for three weeks, spending two weeks in Austria and one in Hungary, you should apply for the Schengen visa at the Austrian consulate.
It is sometimes difficult to determine the main destination, for example where the traveler intends to make several consecutive short stays of approximately the same length in various Schengen States. In this case, you should go to the consulate of the first country you intend to visit.
Practical example: A businessman plans a trip to Europe to meet business partners in various European capitals, in each of which he will stay for one or two days. He has booked a trip to Frankfurt, from which he will continue on his journey. In this case, the appropriate consulate is the German consulate.
Who can submit a visa application?
The applicant can submit personally his/her own or his/her family member’s visa application
The applicant can submit personally his/her own or his/her family member’s visa application
Do I need to provide any background information for the interpreter?
It is very helpful, if not vital, to supply background materials relating to the meeting well in advance. References, terms and acronyms familiar to those in your field are not always clear to an outsider. Interpreters need to familiarise themselves with every new subject, so drafts and presentation slides are invaluable.
How can I display foreign-language text on my computer?
Most versions of Microsoft Windows XP and Microsoft Office will allow you to display foreign language text. Depending on your current settings, many common European and Asian languages will work on your computer without any changes. Some specialized settings and configurations are needed for other languages.
Word offers varying degrees of support for a wide variety of languages, including character-based languages such as Chinese and Japanese and languages written from right to left such as Arabic and Hebrew. You can review current settings or change them by using the “Date, Time, Language, and Regional Options” link after clicking on Window XP’s “Control Panel”.
Then you will need to configure Word by using its language settings tool. Even if you can’t configure your computer to display the translations, we can provide an Adobe Acrobat PDF file that you can view and print on almost any computer using Adobe Acrobat.
At DBA we treat every piece of work as confidential, but we are happy to sign a Confidentiality Agreement if necessary. Please bear in mind, we will retain copies of your source documents and translations for three years unless you specify otherwise.
How do you handle translations that are targeted for audiences with lower levels of education than that of the original English text?
The reading level of DBA’s translations generally matches that of the English source text. However, when a client wishes to target individuals with lower levels of education, DBA’s Services’ Project Managers/Editors and Translators work closely to make sure the translation accommodates that need.
When the register of the English source text is significantly above that of the target audience, and use of common high register/low register synonyms will not meet the needs of the target audience due to the complexity of the English source text, DBA translators work with clients to simplify the source English text before beginning translation. By lowering the register of the English text prior to translation, the client sees the exact message given to the target audience and we is able to certify that the translation accurately reflects the English document.
Our conference interpreters tend to charge a daily fee. Preparation time, travel time, travel costs, accommodation and food are often factored into the cost. Other forms of interpreting are charged on a half-day or hourly basis, where a minimum charge applies. If an assignment is cancelled, a fee of up to 100% will be charged, as interpreters are unlikely to find an alternative job at short notice.
Can market intelligence benefit large corporations?
Most Fortune 500 companies routinely engage in competitive intelligence and continue to invest in improving their CI capabilities. These corporations realise that in the face of turbulent markets and globalization, winning strategy requires an intimate understanding of the changing competitive landscape.
Our Advisors can work with your strategic planning, business development, marketing or research team to improve the efficiency and effectiveness of your activities. Our knowledge of industry best practices and the cutting edge techniques being leveraged by Fortune 500 companies will help you to turn competitive intelligence into a distinct advantage over your competition. DBA offers customised training to internalise the competitive advantage of market intelligence.
How is competitive intelligence different from market research?
Competitive intelligence and market research share many similarities, but differ in scope and intention. Competitive and market intelligence encompasses a broader scope than traditional market research as it addresses the full breadth of a company’s business environment while market research is often customer-focused.
Competitive intelligence is a process to turn data and information into actionable insights for decision-making. Many other research disciplines stop at the level of data and information without attempting to ‘read between the lines’ and provide insights that companies can act upon. This is the real value proposition of competitive intelligence; that it is a process for companies to turn their knowledge about the past and present into intelligence about future actions.
Is market intelligence relevant for a small business or small to medium size enterprise (SME)?
SMEs and small businesses are ideally positioned to take advantage of market intelligence. Because of their smaller size, they are better equipped to capitalize on opportunities revealed by competitive intelligence.
Without market intelligence, small businesses are the most vulnerable to unforeseen risks and market shifts. Big players, such as Microsoft and Kodak, have recovered from market intelligence failures simply as the result of their sheer size and strong market position. Small businesses would not likely survive similar scenarios.
Isn’t competitive intelligence like corporate espionage?
No, competitive intelligence is governed by the Society of Competitive Intelligence Professionals (SCIP) Code of Ethics which outlines the legal and ethical requirements for performing CI. We have adopted SCIP’s guidelines and commit that we never misrepresent ourselves during our work, we honour all requests for confidentiality and we will not collect information that is safeguarded as confidential.
Isn’t competitive intelligence time-consuming and costly?
Competitive intelligence succeeds because of its ability to break down complicated issues about your external environment into manageable chunks. Using CI industry best practices to move forward quickly and efficiently, our focus is to minimize time spent on data collection and maximize the actionable insights you need to address your key business issues.
Our company is successful and growing, how can market intelligence benefit our business?
Market intelligence is even more important for a growing business as growth can strain valuable resources. Intelligence can help you focus on the most profitable opportunities and stay ahead of the competition that will be looking to take your hard earned market share.
For successful and growing companies who wish to adopt competitive intelligence as a source of competitive advantage, we will perform CI audits and offer customized training to grow your internal capabilities.
What is the outcome of competitive intelligence (CI)?
Our competitive intelligence services are tailored to your unique needs. Starting with a thorough needs analysis, we work with you to determine the specific intelligence you need to move your business forward and define project success metrics. From market segment analysis to risk mitigation, our focus is on creating the actionable information you need to move forward with confidence.
Are there plans for a full postal system in the UAE? If so, when will this be launched?
There were reports in early 2009 that Emirates Post was implementing a system of home delivery of mail in the UAE, to be up and running by 2012. Don't get too excited just yet - when you start seeing letter boxes outside your apartment building or villa, then something might be on the cards.
Can an individual get a P.O. Box or does it have to be a company?
You can get your own personal mail box - a good idea if you think you may be changing employers on a regular basis, but want to stay in the UAE. The only disadvantage is you have to go and get your own mail however, our collection and delivery service includes personal mail boxes.
There is no mail delivery to street addresses in the UAE, all mail goes to PO Boxes at the various post office locations. Most residents have mail delivered to their company's post office box, which is usually collected daily by companies, and delivered to their employees. DBA assistants will collect and deliver your mail to your home or office address.
Do courier companies deliver to home or street addresses?
Courier companies such as Aramex, DHL, Fedex will do home and office deliveries. It is normal to supply them with a telephone number for the recipient so the courier company can phone and get directions to the delivery location. Street addresses do exist, sort of, but navigation is more often done with the use of major landmarks, common names for streets (rather than the signposted name), and building names and colors.
I am moving into an apartment, will I also get a P.O. Box?
It's possible (but unlikely) that those living in apartment buildings have P.O. Boxes provided - the building owner, not you or your landlord, has to arrange this with the Emirates Post. Or if undesignated post office boxes are installed in the building already, you may be able to rent one individually direct from Emirates Post.
What address do I give for delivery when ordering items from abroad as they ask for my address?
Your address is normally accepted as the company's PO Box in the UAE. This can cause problems when supplying an address to various organisations overseas that are not familiar with mail delivery in Dubai and the UAE (and many other countries in the Middle East). Usually if you explain the situation, companies will be sympathetic.
Internationalisation is the software engineering effort that takes place before translation and localisation. Source code modifications are usually necessary if a product has not been written with translation and localisation in mind. Typical international design decisions will consider character encoding and display, multilingual resource file management, user interface and screen real estate and user acceptance testing. We offer consultancy and training for the development teams who are planning to take their products global
Localisation is more than the translation of words and involves adapting a product or service to the linguistic, cultural and legal conventions of the target market. For a software product, localisation activities can range form converting content such as ‘Zip Code’ to ‘Postal Code’ through to complete adaptation of software code, user interface and online assistance.
We ensure the changes fully reflect the operating practices of our clients and the target market.
Yes. The UAE recognises driving licences from certain countries. Yes. The UAE recognises driving licences from certain countries. A local UAE license can be issued upon the completion of required formalities.
Can I have a licence from Jafza but operate from Dubai or other Emirates?
The licence issued by Jafza is valid for operating your business only inside the free zone territory. You cannot use this licence to set up a business in any of the other Emirates. Goods maybe sold to other Emirates through distributors.
Yes, subject to your particular licence. Jafza companies operating in the Jebel Ali Free Zone are amongst the major re-exporters in the region. No duties imposed if goods are imported and exported within the Free Zone.
How do I activate the water and electricity at the property?
Once approved and you obtain the keys, the next step is to have the utility services connected. DEWA (Dubai Electricity & Water Authority) can be contacted on 04 304 1304 or take a browse on their website at www.dewa.gov.ae
A security deposit is required, this is usually around 1,000 AED and refundable when the service is terminated and fully paid up. Do remember to take a copy of the lease, a copy of your passport and residency visa, and a no objection letter from the employer if the connection is to be in the company name. If the service is to be in the name of the Company (as showing on the lease) ask for a list of the required documents.
How is the tenant protected against faults and damage to the property prior to them moving in?
The property will need to be left in the same condition as is handed over to the tenant. This shall be monitored by a documented report called the ‘Entry Condition Report’ which shall serve as a protection to the tenant against the claim of a Landlord for damage or condition of a property which was present before the Tenant’s occupation. This must be signed by both parties. Who pays for exactly what i.e. repairs, maintenance etc shall be stipulated in the Tenancy Contract, and both parties are bound by this agreement.
Upon leaving the property, an ‘Exit Condition Report’ is completed by the Tenant and Landlord (or Landlord’s Agent) and the both reports must match. It is a good idea to take some photographs of any damage which your concerned about to ensure you are not blamed for damage, have the Landlord or Landlord’s Agent sign these immediately to protect yourself.
How much notice should a Landlord give a Tenant if they don’t wish to renew the lease?
A Landlord must provide 90 days notice to a tenant if the lease is not permitted to be renewed by the Tenant, this is only acceptable if the Owner or his/her immediate family are moving into the property. The Termination Notice must be served on the Tenant on the approved form.
Usually the dealer will take care of this for you if you supply them with all the relevant documents such as passport with residence visa, insurance papers (unless they're arranging that for you), and driving license.
Registration has to be done annually. Insurance is for 13 months which gives you a month's grace period after registration expires to go for renewal. If you are in your 13th month, they may send you back to update the insurance.
What are the benefits of investing in a unit trust?
Diversity: The professionals who manage the unit trust portfolios, known as investment managers, spread the risks involved in investing by investing in a variety of underlying assets. By investing a small amount in a unit trust, you are exposed to a wide range of assets.
The investment amounts are not prohibitive: With unit trusts, a small sum allows you to invest in a well-diversified portfolio.
Your investment is easily accessed: You can redeem your unit trust investments (convert them back into cash) whenever you need the money. There are no minimum investment periods.
A Redemption is when you wish to sell some or all of your units that you own in a unit trust portfolio. The proceeds are then paid into your nominated bank account. A sale of units is sometimes referred to as a repurchase, as the manager of the Collective Investment Scheme is by law (subject to certain exceptions) obligated to repurchase your units from you at your request.
A unit trust, also known as a Collective Investment Scheme (CIS) portfolio, is a professionally managed spread of investments in which a group of investors pool their money. A unit trust portfolio typically invests in shares, bonds, money market instruments and other investments. This pool is then divided into equal units, also referred to as participatory interests, in which investors share in the fund’s gains, losses, income and expenses on a proportional basis.
Unit Trusts are ideally suited to people who do not have the time or knowledge required to select individual shares on stock exchanges themselves, or who have limited capital, but would like the benefits of professional investment management and diversification.
Different unit trusts suit different investors’ financial needs and have different levels of risk. You should invest in a fund that suits your needs and particular circumstances.
Paralegal Services guarantees that the letter sent to your recipient will be professionally written and be mailed to the receiving party within 2 business days or we will refund 25% of the purchase price for each day we are late up to the full purchase price. You have nothing to fear when using Paralegal Services!
How long will it take me to describe my situation and have a letter drafted?
We have made it easy to provide us with your concept. It should take only a few minutes to complete a form. It is best to remember that the purpose of the letter is to invoke a response from the receiving party that is appropriate and legal. Generally, if you have drafted a letter before making your request, you can simply paste it into our form and we can formulate our professional letter using the information provided.
We will process your letter within 2 business days. The letter will be sent to the receiving party via a courier and their certified mail return receipt requested. You will be notified via email when the return receipt has been received.
Is Paralegal Service’s document drafting service safe and secure?
It is safe and secure and completely legal. We use the latest encryption technologies to ensure that your data is secured as well as uses the advanced payment mechanisms of PayPal to ensure the safety of your financial information. We apologize if this security measure causes an inconvenience for multiple orders.
Is the demand letter just a form of threat intended to compel the other side to pay up?
No, the demand letter is designed to reach a civilized solution to the financial predicament that one party has caused to the other. By pointing out that further legal action may be taken if no resolution is found, the demand letter is intended to encourage settlement rather than going to trial.
Does the new rule also have two options for a visa change, either the person has to exit for a visa change or pay the fee to process the visa change while inside the UAE?
Yes, a visit visa may still be converted to a work visa, but residency departments may decide otherwise to prevent misuse of this facility. Applicants may be asked to go back to their home country and wait for a work visa, which will be authorised by the Ministry of Labour.
If someone lives in the UK and visits their daughter who lives in Dubai, is a visa required?
Britons are among people from 34 countries who are allowed to obtain a visa on arrival free of charge. The visa will be for 30 days and can be renewed for a similar period for Dh610. If you are not British, your daughter can still sponsor you on a 30-day or 90-day visit visa.
My sister and her family (Indian nationals) are transiting through the UAE in November. They will be on a transit visa. They will leave the UAE within 24 hours. They would like to come back to the UAE on a visit visa within 15 days. Is there any difficulty in this? Is it allowed?
No, the visa can be obtained any time provided that a valid reason is given.
Under the new regulations, will it still allow exit to Kish when you want to change your visa to another company as most companies release your passport at the airport.
No, authorities will stop short trips to neighbouring countries to change visit visas commonly known as 'visa runs'. Visitors wishing to apply for a new visit visa after the expiry of their visa, must go back to their home countries. But officials have not spoken of any time-frame as to how long they will have to stay abroad before they can apply for a new visa.
Can I discuss the details of my invention with a potential investor before filing a patent application?
It is important to file a patent application before publicly disclosing the details of the invention. In general, any invention which is made public before an application is filed would be considered prior art. Although the definition of the term ‘prior art’ is not unified at the international level, in many countries it consists of any information which has been made available to the public anywhere in the world by written or oral disclosure. In countries which apply the above definition of the term ‘prior art’, the applicant's public disclosure of the invention prior to filing a patent application would prevent him/her from obtaining a valid patent for that invention, since such invention would not comply with the novelty requirement. Some countries, however, allow for a grace period, which provides a safeguard for applicants who disclosed their inventions before filing a patent application, and the novelty criteria may be interpreted differently depending on the applicable law.
For example, if it is inevitable to disclose your invention to a potential investor or a business partner, before filing a patent application, such a disclosure should be accompanied by a confidentiality agreement.
Can I obtain a patent for my software-related invention?
Procedural and substantive requirements for the grant of patents are different from one country/region to the other. In particular, practices and case law regarding the patentability of software-related inventions vary significantly in different countries. For example, in some countries, “inventions” within the meaning of patent law must have a ‘technical character’ and software as such is not considered a patentable invention, while in others, such requirements do not exist, so that software is generally patentable subject matter.
It is therefore recommend that you speak with one of our practicing lawyers who is specialized in intellectual property or the intellectual property offices of those countries in which you are interested to get protection. A list of URLs and a directory of national and regional intellectual property offices are available.
On the other hand, computer programs may be protected under copyright. According to a well-established principle, copyright protection extends only to expressions, not to ideas, procedures, methods of operation or mathematical concepts as such.
Does the TRIPS Agreement apply to all WTO members?
All the WTO agreements (except for some ‘plurilateral’ agreements) apply to all WTO members. The members each accepted all the agreements as a single package with a single signature making it, a ‘single undertaking’.
The TRIPS Agreement is part of that package. Therefore it applies to all WTO members. More on the single undertaking. The agreement allows countries different periods of time to delay applying its provisions. These delays define the transition from before the agreement came into force (before 1 January 1995) until it is applied in member countries. The main transition periods are:
Developed countries were granted a transition period of one year following the entry into force of the WTO Agreement, i.e. until 1 January 1996.
Developing countries were allowed a further period of four years (i.e. to 1 January 2000) to apply the provisions of
The agreement other than Articles 3, 4 and 5 which deal with general principles such as non-discrimination.
Transition economies, i.e. members in the process of transformation from centrally-planned into market economies, could also benefit from the same delay (also until 1 January 2000) if they met certain additional conditions.
Least-developed countries are granted a longer transition period of a total of eleven years (until 1 January 2006), with the possibility of an extension. For pharmaceutical patents, this has been extended to 1 January 2016, under a decision taken by ministers at the Fourth Ministerial Conference in November 2001.
Does the TRIPS Agreement require all member’s rules on protection of intellectual property to be identical?
No, the TRIPS Agreement requires members to comply with certain minimum standards for the protection of intellectual property rights covered in it.
But Members may choose to implement laws which give more extensive protection than is required in the agreement, so long as the additional protection does not contravene the provisions of the agreement.
This is why the TRIPS Agreement is sometimes described as a “minimum standards” agreement.
In addition, the agreement gives members the freedom to determine the appropriate method of implementing the provisions of the agreement within their own legal system and practice. The agreement thus takes into account the diversity of members’ legal frameworks (for instance between common law and civil law traditions).
At present, no ‘world patents’ or ‘international patents’ exist.
An application for a patent must be filed, a patent shall be granted and enforced in each country in which you seek patent protection for your invention, in accordance with the law of that country. In some regions, a regional patent office, for example, the European Patent Office (EPO) and the African Regional Intellectual Property Organization (ARIPO), accepts regional patent applications or grants patents, which have the same effect as applications filed or patents granted in the member States of that region.
Any resident or national of a Contracting State of the Patent Cooperation Treaty (PCT) may file an international application under the PCT. A single international patent application has the same effect as national applications filed in each designated Contracting State of the PCT. However, under the PCT system, in order to obtain patent protection in the designated States, a patent shall be granted by each designated State to the claimed invention contained in the international application. Further information concerning the PCT is available.
Procedural and substantive requirements for the grant of patents as well as the amount of fees required are different from one country/region to the other. It is therefore recommended that you consult a practicing lawyer who is specialized in intellectual property or the intellectual property offices of those countries in which you are interested to get protection. A list of URLs and a directory of national and regional intellectual property offices are available.
The first step in securing a patent is the filing of a patent application. The patent application generally contains the title of the invention and as well as an indication of its technical field it must include the background and a description of the invention in clear language and enough detail that an individual with an average understanding of the field could use or reproduce the invention. Such descriptions are usually accompanied by visual materials such as drawings, plans or diagrams to better describe the invention. The application also contains various ‘claims’ or information which determines the extent of protection granted by the patent.
Is it necessary to submit audit and financial returns?
No annual reports or accounts need to be filed. Accounts must be audited and accounts must be distributed to shareholders (but NOT filed with the authorities). Dubai offshore company may retain their accounting records wherever in the world the directors deem appropriate.
Is there a requirement regarding Directors of the company and the secretary?
A minimum of two directors and one secretary are required and they cannot be bodies corporate. One of the directors can also be a secretary. A register of directors must be held at the Registered Office, but it is not a matter of public record.
What are the minimum and maximum number of Shareholders a Dubai Offshore Company can have?
A Dubai offshore company can have minimum one and a maximum of 50 persons whose liability is limited to their shares in the company's capital. 100% foreign ownership of the company is allowed. There is no public register of shareholders and directors. Shareholders need to visit Jafza and sign the incorporation documents in the presence of the authorized official of Jafza. Alternatively a power of attorney, notarized and legalized by UAE Embassy, can be issued to a nominated person who can then sign before Jafza authorized official.
Can your company purchase only a portion of my company’s invoices?
Absolutely, but remember that higher numbers of receivables purchased on a regular basis can result in more competitive rates. Terms can be especially flexible when there are large numbers of invoices issued to a larger, rather than smaller, pool of your customers.
Invoice verification is an essential, and accepted, part of funding. Because factors verify invoices with customers, they can tell clients if there is a customer service problem right away. A non-factoring client may not notice the problem until the invoice becomes past due. By that time, it may be too late to save the account. For the process to run smoothly, we suggest that you call your customers or send them a letter in advance to let them know that you are now working with a factor. If you need assistance in writing the notification letter, we will be happy to provide you with a sample letter.
How can accounts receivable funding help my business?
By providing an immediate source of cash flow for your company. You can use this cash to provide working capital, meet payroll, pay taxes, replenish inventory, increase advertising, purchase equipment, improve your credit rating, and more.
How can I be certain that the factor will treat my customers well?
The last thing we want is for you to lose a customer. We are not acting as a collection agency in this situation. We will never harass your customers for money. Maintaining your customers’ goodwill and confidence are of utmost importance to us!
How is accounts receivable funding from your company different than accounts receivable financing from a bank?
When making a funding decision, we focus on the creditworthiness of your customers while banks will focus on your company’s financial history and cash flow. Plus, since accounts receivable funding is not a loan, there is no debt on your company’s balance sheet. Best of all, we will make a quick funding decision, while banks may take weeks—even months—to approve a loan.
An employee working in my company got a seven day sick leave three weeks back and has not turned up to work till this day. I have recently come to know that he has passed away. What is my responsibility as an employer towards his family, do I have to pay?
You will be required to pay gratuity, end of service benefits, and leave salary as per requirement and any pending salary dues if any.
There a three general types of transactions in the acquisition of a business. The purchase of the assets of the business, the purchase of the stock of the business owning the assets, and a merger of the buyer with the business.
A Leveraged Buyout (LBO) is a transaction whereby a company's stock or assets are purchased with borrowed money, making the company's new capital structure to be a high percentage of debt. An acquisition of all the selling company's stock, usually by a newly formed corporation created for the sole purpose of the acquisition, followed immediately by a merger of the buyer's new company with the acquired company, so that the assets of the acquired company become available to the buyer to secure debt.
A merger occurs when one or more firms directly or indirectly acquire or establish direct or indirect control over the whole or part of the business of another firm. The word Merger has a strictly legal meaning and has nothing to do with how the combined companies operate in the future. A merger occurs when one corporation is combined with and disappears into another corporation. All mergers are statutory mergers, since all mergers occur as specific formal transactions in accordance with the laws, or statutes, of the states where the company's are incorporated. The post-transaction operations or control of a company has no relevance on whether a merger has occurred or not.
The seller transfers the shares in the acquired corporation to the purchaser in exchange for an agreed-upon payment. A Stock Transaction is appropriate when tax costs or other problems of doing an asset transaction make an Asset Transaction less appealing.
The acquired company transfers the assets of the business to the purchaser. These could include equipment, inventory, and real estate, as well as intangible assets such as contract rights, leases, patents, trademarks, etc. These could be all or a portion of the assets owned by the selling company. The acquired company executes the specific types of documents necessary to transfer the assets, such as deeds, bills of sale, and assignments.
An Earnout is a method of compensating a seller based on the future earnings of a company. It is the contingent portion of the purchase price. A common type of Earnout provides for additional payments to a seller if the earnings exceed agreed-upon levels. Another type of Earnout may provide that certain debt given to the seller as part of the acquisition price be paid out early if earnings exceed agreed-upon levels.