Military Personnel Participation in Startups and Shareholdings in UAE.

We have not identified, in the publicly available legislation reviewed, a general prohibition preventing members of the UAE Armed Forces from holding a passive shareholding in a private company, including a startup, solely by reason of their military status.

Federal Law No. (7) of 2004 appears to distinguish, in practice, between the mere holding of an investment and the carrying out of activities or work that may conflict with military service. Article 33(1) provides that Armed Forces personnel may not carry out any work for others, whether remunerated or not, without the permission of the Chief of Staff or their delegate. Article 32 further requires personnel to protect the interests of the Armed Forces and to refrain from activities that conflict with their service obligations or undermine the dignity of the service.

Accordingly, while passive ownership does not appear to be expressly prohibited, active participation in the management, operation or activities of a private company may raise separate issues under the statutory restrictions governing outside activities.

The position will ultimately depend on the particular circumstances, including the service member's role and responsibilities, the nature of the company's activities, the extent of the individual's involvement in the business and whether any conflict arises with the individual's military duties.

We have not identified any publicly available provision requiring Armed Forces personnel to obtain prior approval before acquiring a purely passive shareholding in a private company.

However, Article 33(1) of Federal Law No. (7) of 2004 expressly requires permission from the Chief of Staff or their delegate before carrying out work for others. As a result, where a service member's involvement extends beyond passive investment and includes management functions, operational participation, consultancy services or other forms of active engagement, the approval requirement under Article 33(1) may be engaged.

Similarly, we have not identified a generally applicable statutory requirement to notify the relevant military authority of every passive shareholding. Nevertheless, internal regulations, security procedures or service-specific requirements may impose additional disclosure obligations that are not publicly available.

Accordingly, where a proposed investment overlaps with the individual's official responsibilities, or where the company operates in the defence, security, cybersecurity, intelligence or other sensitive sectors, it would be prudent for the service member to seek guidance from the relevant military authority before acquiring or increasing the interest.

We have not identified any publicly available statutory threshold based on the percentage of shares held above which Armed Forces personnel are generally prohibited from holding an interest in a private company.

The principal restrictions instead arise from the general obligations and prohibitions applicable to military personnel under Federal Law No. (7) of 2004. In particular:

• personnel must protect the interests of the Armed Forces and the State and refrain from activities that are inconsistent with their service obligations;
• personnel may not carry out outside work without the required permission;
• personnel must maintain the confidentiality of information that is confidential by its nature or pursuant to specific instructions, and this obligation continues after the end of service; and
• personnel may not have, directly or indirectly, an interest in any works, contracts or procurement activities relating to the Armed Forces, except in the limited case of leasing real property owned by them.

This restriction is reinforced by Article 12 of Decision No. 12 of 1986 (Regulation of Bids and Tenders in the Armed Forces), which mirrors the prohibition in Article 34 of Federal Law No. (7) of 2004 but provides additional specificity. Article 12 expressly states that Armed Forces personnel may not submit bids in tenders, be entrusted with the execution of works, or supply goods or services to the Armed Forces, whether directly or through entities in which they hold an ownership interest or act as representatives.

This provision is particularly relevant where a service member holds shares in a company that bids for or contracts with the Armed Forces, as the shareholding itself could constitute a prohibited interest. Accordingly, the restriction may be broader than a conventional conflict-of-interest rule, as it expressly applies to interests in works and contracts relating to the Armed Forces.

Particular scrutiny may therefore arise where:

• the company operates in the defence, military, security, cybersecurity or dual-use technology sectors;
• the company contracts with, or seeks to contract with, the Armed Forces or other UAE defence or security authorities;
• the service member has duties relating to procurement, contracting, regulation or oversight that are relevant to the company's activities; or
• the service member could use, or be perceived as using, confidential or sensitive information obtained through military service for the benefit of the company.

Conclusion

Based on the publicly available legislation reviewed, we have not identified an express prohibition preventing members of the UAE Armed Forces from holding passive shareholdings in private companies, including startups, solely by reason of their military status.

However, the statutory framework imposes significant restrictions relating to outside work, confidentiality and interests connected with Armed Forces contracts and procurement activities.

Accordingly, while passive share ownership appears distinguishable from active participation in a business, caution is warranted. The key legal and practical considerations are likely to be compliance with the approval requirements for outside activities, the avoidance of conflicts with official duties, confidentiality obligations, restrictions relating to Armed Forces contracts and any additional requirements contained in internal military regulations that are not publicly available.