The UAE corporate landscape changed again in October 2025. Federal Decree-Law No. 20 of 2025 introduced major amendments to the UAE Commercial Companies Law. This reshapes how mainland companies can structure ownership. It also addresses how these companies raise capital and resolve their disputes. It is also defined how they move between regions. Is your understanding of UAE company law based on rules before October 15, 2025? It is now incomplete.
We’ve prepared an updated guide for you that has everything up-to-date information explained. If you are planning a mainland business setup or reviewing your current structure, now is the time to reassess your compliance strategy.
Read more about KPM PRO’s UAE company formation or LLC setup services here!
What’s the UAE Commercial Companies Law?
The UAE commercial companies law is governed by Federal Decree-Law No. 32 of 2021. The law is popularly referred to as the CCL UAE framework. It regulates:
- How mainland companies are formed
- How these companies managed
- How they governed and converted
- How they dissolved across the UAE.
The law applies to most mainland business activities. These activities include commercial companies, industrial businesses, banking entities, real estate companies, and investment activities.
The UAE issued Federal Decree-Law No. 20 of 2025, which amended many core provisions of the 2021 law and introduced some of the biggest corporate governance reforms seen in years. The amendments officially took effect on 15 October 2025.
Understand this one major clarification: free zone companies operating on the mainland must comply with mainland Commercial Companies Law requirements for their onshore activities.
The 2021 framework also completely replaced the previous 2015 Companies Law. There’s no hybrid application anymore. As a business owner, you must comply with the updated legal regime currently in force.
The UAE’s strategy is clear to create a more investor-friendly corporate environment. Aligning with international governance standards is equally important.
Key Changes Under the 2025 Amendments:
The 2025 reforms were not cosmetic under the Federal Decree-Law No. 20 of 2025. They fundamentally modernized the UAE corporate structuring.
These changes open opportunities that previously existed only in offshore or free zone structures for many businesses.
1. Multiple Share Classes Now Allowed in LLCs:
Multiple share classes are the most prominent reforms for LLC UAE 2026 structuring.
Previously, LLC shares were generally treated equally. That restriction made UAE mainland companies less attractive to investors. In comparison to regions offering flexible equity rights. multiple share classes, UAE LLC
Now, UAE LLCs can issue multiple classes of shares with different voting rights, dividend rights, redemption rights, liquidation priorities, and investor privileges.
Founders can separate control from economic ownership under this change. Something venture-backed startups and family businesses have demanded for years.
The amendment also formally recognizes in-kind contributions such as intellectual property, real estate, equipment, and technology assets.
These non-cash contributions must undergo independent valuation under the Ministry of Economy standards. This creates a much more flexible capital structure environment inside mainland UAE companies for investors.
2. Drag-Along & Tag-Along Rights Now Statutory:
Shareholder rights in the UAE relied on side agreements to manage exits and investor protections for years. It has changed now!
The amended law now allows drag-along and tag-along UAE companies law rights to be written directly into a company’s Memorandum or Articles of Association.
It does matter because statutory rights are easier to enforce than separate shareholder agreements. These provisions are important for joint ventures, venture capital deals, family businesses, private equity structures, and succession planning.
For instance, a drag-along clause can force minority shareholders to sell if a majority sale is approved. A tag-along clause protects minority shareholders. The clause permits them to join a sale under the same terms. The UAE is moving closer to foreign-recognized corporate governance practices.
3. Re-Domiciliation: Move Your Company Without Dissolving It
The re-domiciliation reform could transform UAE restructuring strategies. Now, companies can transfer registration between Emirates, Mainland, and free zones, Free zone to mainland, and Overseas jurisdictions into the UAE without even dissolving the original company.
Companies have the authority to keep their legal identity, existing contracts, operating history, licences, and banking relationships.
Previously, businesses often had to liquidate and re-incorporate. This creates disruption and legal risk. But the new reform changes everything. Under this, now there is a recognized company re-domiciliation UAE pathway.
Some implementing regulations, however, are still pending for transfers involving financial free zones. This may include DIFC and ADGM free zones. Businesses considering relocation should monitor Cabinet and regulatory updates closely.
4. Non-Profit Companies Now Formally Recognised:
UAE mainland law formally recognizes non-profit companies in the UAE. This is happening for the first time in history. These entities can pursue social initiatives, cultural programs, educational objectives, and philanthropic missions.
But there is one strict condition that exists. The condition is that profits can’t be distributed to shareholders. Any surplus must be reinvested into the organization’s stated purpose.
Still, detailed governance rules are being finalized at the Cabinet level. However, this creates a legitimate legal framework for mission-driven organizations operating onshore.
5. Deadlock Resolution Mechanism:
Governance disputes have historically been a major weakness in closely held UAE companies. The new amendments address that gap. The licensing authority may appoint an independent director for up to one year if shareholders become deadlocked and management decisions can’t proceed. Particularly relevant to fifty-fifty joint ventures, family-owned businesses, and split-ownership companies.
The reform creates a formal statutory mechanism. Previously, businesses often faced lengthy disputes or paralysis.
6. Private Placements Open to PrJSC:
Private Joint Stock Companies in the UAE now have greater fundraising flexibility.
Under the new amendments regarding PrJSC capital raising, UAE:
“PrJSCs can raise capital through private placements on UAE financial markets without conducting a full IPO.”
This creates new growth-stage financing opportunities. In the meantime, reducing the regulatory burden of going fully public. The SCA – Securities and Commodities Authority is still finalizing implementation rules. However, the direction is clear. According to this, the UAE wants deeper private capital markets.
Company Types Under the UAE Commercial Companies Law:
Making the right legal structure choice in 2026 matters more than ever.
| Company Type | Key Features | Best For |
| LLC | Flexible ownership, no minimum mainland capital | SMEs, startups, foreign investors |
| PJSC | Public share offerings allowed | Large enterprises |
| PrJSC | AED 5M minimum capital | Growth-stage private businesses |
| Single Owner Company | One shareholder | Solo entrepreneurs |
| Civil Company | Professional services | Consultants, doctors, lawyers |
| Holding Company | Holds subsidiaries | Investment groups |
| Branch Office | Extension of the foreign parent | Overseas companies |
| Representative Office | Marketing only | Market entry |
| Non-Profit Company | Social purpose structure | NGOs and foundations |
(LLC) – Limited Liability Company:
The LLC remains the most popular UAE structure. There are many key advantages of having it. You can start it with a minimum of one shareholder. No mandatory mainland capital threshold is required for the setup. In an LLC, a flexible ownership opportunity is available. The LLC model is widely accepted by banks and investors. Post-2025, LLCs now support multiple share classes, in-kind contributions, and enhanced shareholder protections. Manager terms can also continue for up to six months if replacements are delayed.
(PJSC) – Public Joint Stock Company:
A PJSC is designed for larger businesses seeking public investment. To start operating it, you may require three to eleven directors, SCA approval for public offerings, and formal governance standards. Companies must update structures within one year of implementing regulations or risk liquidation exposure.
(PrJSC) – Private Joint Stock Company:
A PrJSC now plays a more strategic role in the UAE capital markets. Under this, a minimum capital of five million dirhams is required with private placement access, faster investor exit pathways, and reduced transfer lock-up periods. This structure is becoming attractive for scaling companies. Those who prepare for future listings.
Full Foreign Ownership: What Still Applies in 2026?
UAE foreign ownership 2026 rules are the UAE’s biggest economic reform that remains fully active in 2026. Foreign nationals can now enjoy 100% foreign ownership on the UAE mainland across most commercial sectors. The old mandatory fifty-one percent Emirati ownership rule has largely disappeared.
Still, restrictions apply to certain strategic impact sectors. This may include oil and gas, defense industries, security services, and certain utility sectors. Cabinet Resolution No. 55 of 2021 outlines restricted activities. As an investor, you should verify whether your specific activity remains regulated. Do this right before establishing your business.
The 2025 amendments also clarified that free zone entities are recognized as UAE juridical persons. This reduces cross-border structuring uncertainty.
Corporate Tax & Compliance Under the Current Law:
Corporate compliance is now one of the biggest operational priorities for UAE companies.
Corporate Tax:
The government introduced the UAE corporate tax for commercial companies in June 2023.
According to this, the current rates are:
| Profit Threshold in Dirhams | Tax Rate in % |
| Up to 375,000 | 0 |
| Above 375,000 | 9 |
Qualified Free Zone Persons may still access exemptions under specific conditions.
VAT Compliance:
UAE VAT business compliance has its significance and has never been ignored. The VAT rules remain separate. The VAT registration threshold is 375,000 dirhams in annual taxable supplies.
Businesses often confuse VAT thresholds with corporate tax thresholds. They’re entirely different compliance systems.
Audit Requirements:
Companies generally require auditors if they have more than twenty shareholders and more than fifty million dirhams in annual revenue.
UBO Requirements:
(UBO) Ultimate Beneficial Ownership filings remain mandatory. Businesses must maintain accurate beneficial ownership records and provide them to competent authorities upon request.
Compliance Checklist:
Businesses need to know about this checklist. The practical 2026 action plan for UAE companies is as follows:
Immediate Compliance Priorities:
- Review your Memorandum of Association
- Assess whether multi-class shares could benefit your structure
- Add drag-along and tag-along protections where relevant
- Verify whether mainland compliance applies to your free zone activities
- Confirm whether your business now requires statutory auditing
- Review shareholder governance procedures
- Monitor pending Cabinet regulations on re-domiciliation
- Reassess investor and succession planning structures
Conclusion
Previously, employers considered the UAE Commercial Companies Law to be related to business registration. In 2026, it has now become a sophisticated corporate framework. The law is designed for investors and founders. Venture-backed companies and international businesses also need it. The 2025 amendments introduced structural flexibility that simply didn’t exist before, from multiple share classes to statutory shareholder protections and company re-domiciliation.
Businesses that fail to update governance documents, ownership structures, and compliance procedures risk falling behind the law.
Check whether your review of its structure has been updated since October 2025. If not, now is the time to conduct a legal and compliance review. Another way is to speak with a UAE business setup specialist. KPM PRO experts know deeply about the UAE commercial companies law and help every employer stay updated with it.
FAQs:
What is the UAE Commercial Companies Law?
It is the primary federal law. It governs UAE mainland companies under Federal Decree-Law No. 32 of 2021.
What changed in the UAE Commercial Companies Law in 2025?
Major reforms have been made in the commercial law companies in 2025, including:
- Multiple share classes for LLCs
- Statutory drag/tag rights
- Re-domiciliation pathways
- Non-profit company recognition
- Private placements for PrJSCs.
Can foreigners own a UAE mainland company?
Most mainland sectors now allow full foreign ownership except for restricted strategic sectors.
What’s the difference between an LLC and a PJSC in the UAE?
LLC:
It is privately owned and simpler to operate.
PJSC:
It can publicly issue shares and must comply with stricter governance rules.
Does the UAE Commercial Companies Law apply to free zone companies?
The commercial companies law doesn’t apply to free zones unless the free zone company conducts activities on the mainland through branches or representative offices.
What’s the corporate tax rate in the UAE?
Zero percent up to 375,000 dirhams in taxable profits and nine percent above that threshold.
What happens if a UAE company does not update its structure under the new law?
Businesses may face regulatory penalties, compliance restrictions, or potential liquidation risks. This depends on the company type.
