LEGAL
IN FOCUS:
Employee Considerations in GCC M&A 2015 continues to be a strong year for mergers and acquisitions in the Middle East and the region is poised to witness a further acceleration in M&A activity. In this article experts from Clyde & Co. highlight some of the key employment aspects arising from business transfers in the GCC.
Sponsorship In order to work lawfully in a GCC country an individual who is not a national of that GCC country (or a national of another GCC member state) must hold a residence visa and work permit, for which they must be sponsored by a locally-registered entity (the Sponsor). GCC nationals will merely need to be registered with the applicable labour authority. As part of the sponsorship process, the individual is required to enter into, and register with the authorities, a prescribed form employment contract with the Sponsor. The Sponsor will therefore be considered the individual’s employer and will be liable for any entitlements which the
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individual accrues under the applicable labour law. An individual is normally only able to work for their Sponsor at the Sponsor’s premises and carry out the type of activities listed in the Sponsor’s commercial trade licence. Types of business transfers There are two principal ways of acquiring a business – share acquisition or asset acquisition. In a share acquisition, the purchaser acquires all of the shares in a company (or companies). In an asset acquisition, the purchaser acquires the assets, liabilities and goodwill of a business, but not the company itself. A key feature of share acquisitions (as
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