UAE Commercial Companies Law Amendments: 2026 Guide

Federal Decree-Law No. 20 of 2025 introduced significant amendments to the UAE Commercial Companies Law. The changes affect 15 articles of Federal Decree-Law No. 32 of 2021 and add a new provision governing the transfer of a company's registration in the commercial register.

For UAE founders, investors and established businesses, the amendments create new options for ownership, financing, shareholder exits, company mobility, conversion and free-zone expansion. They do not mean every option can be used immediately without further approvals. Several mechanisms depend on Cabinet, Ministry, Securities and Commodities Authority or local-authority decisions and procedures.

The amendments at a glance

Why the amendments matter

The earlier Commercial Companies Law already supported 100% foreign ownership for most mainland activities and provided a modern federal company-law framework. The 2025 amendments focus on the next stage: making UAE companies easier to finance, restructure, transfer and continue.

The Ministry has highlighted potential benefits for:

• LLCs seeking institutional or venture-capital investment;
• founders who need differentiated economic and voting rights;
• companies moving between emirates or between mainland and free-zone systems;
• businesses converting to a different legal form;
• free-zone businesses expanding through mainland branches;
• private joint stock companies seeking private funding or market access;
• family businesses planning succession and exits; and
• social-impact businesses that reinvest rather than distribute profits.

1. Multiple classes of interests for LLCs

One of the most important developments is the ability to classify partners' interests in an LLC into different classes. Multiple share classes were historically associated primarily with joint stock companies. Extending this flexibility to LLCs can make the most common UAE company form more suitable for sophisticated investment structures.

The Ministry's official explanation gives examples such as:

• interests with enhanced dividend rights;
• priority in return of capital on an exit or liquidation;
• preferred economic or voting rights;
• interests with different nominal values; and
• restricted interests subject to transfer or approval controls.

The precise classes, procedures and conditions are to be determined through the applicable decisions and competent-authority process. A company should not simply insert a foreign template into its memorandum and assume it is registrable.

Practical use for founders and investors

Different classes can potentially separate economic return from decision-making control. For example, an investor may seek liquidation preference and information rights, while founders seek to preserve defined voting control. Employee or management participation may also be structured differently from ordinary founder ownership.

Any structure should specify:

• voting rights;
• dividend priority;
• capital-return priority;
• conversion rights;
• transfer restrictions;
• reserved matters;
• dilution treatment; and
• rights on sale, liquidation or reorganisation.

2. Transfer of commercial registration

The amendments create a legal framework allowing a company to transfer its commercial registration between emirates, free zones and financial free zones while preserving its original legal personality, contracts, rights and obligations.

This is different from the traditional approach of closing one company and incorporating another. Preserving legal identity may reduce disruption to:

• commercial history;
• customer and supplier contracts;
• assets and liabilities;
• banking and finance arrangements;
• employees;
• intellectual property; and
• tax and accounting records.

Transfer is not automatic. The Ministry identifies conditions including compatibility between registration systems, absence of a legal obstacle, approvals from the relevant authorities, publication of the transfer decision and regularisation of the company's status.

Questions to resolve before transferring

• Do the originating and receiving registrars support the transfer?
• Can the same activity and legal form continue?
• Will external regulators approve the new location?
• Do contracts, loans or leases require consent?
• How are licences, employees and visas migrated?
• Will tax registrations and customs codes remain valid or require amendment?
• How will the company notify creditors and counterparties?

3. Drag-along and tag-along rights

The amendments expressly recognise mechanisms commonly used in shareholder agreements:

• drag-along: qualifying majority holders can require minority holders to participate in a sale; and
• tag-along: minority holders can join a sale by the majority on the same terms.

LLCs and private joint stock companies may include provisions in their memorandum or articles regulating these rights, subject to the required legal approvals.

These clauses can prevent a minority interest from blocking a whole-company sale while protecting minority shareholders from being left behind. They should define:

• the ownership threshold that activates the right;
• the type of sale covered;
• notice and disclosure requirements;
• price and identical-treatment protections;
• warranties required from minority holders;
• completion mechanics; and
• treatment of non-responsive holders.

Existing shareholder agreements should be reviewed against the amended law and the company's registered constitutional documents.

4. Private joint stock company lock-up periods

The amendments reduced the general founders' restriction period on disposal of shares in private joint stock companies from two years to one year and authorised further reduction or exemption through ministerial decision.

Ministerial Decision No. 83 of 2026 provides additional pathways. Its current provisions include:

• reduction to seven months after publication of two consecutive reviewed quarterly financial statements following registration;
• reduction to six months for qualifying multiple share classes allocated to professional investors outside private subscription;
• reduction to six months for shares under an employee share-incentive programme; and
• specified exemptions for transactions involving strategic partners, drag/tag arrangements, capital restructuring, enforcement of a registered pledge and approved special cases.

Conditions and scope matter. A reduction or exemption can apply only to the relevant shares, and the Ministry and competent authority must be notified of completion within the prescribed procedure.

5. Alignment between mainland and free-zone laws

The amendments aim to improve coordination between federal company law, local economic departments, free zones and financial free zones. This is important because companies often outgrow the location or regulatory structure selected at incorporation.

Greater alignment can support:

• relocation without loss of legal identity;
• mainland expansion by free-zone companies;
• conversion between company forms;
• consistent recognition of rights and obligations; and
• more efficient cross-authority filings.

Operational procedures still depend on cooperation between the relevant authorities. Businesses should distinguish the legal possibility created by the amendments from the live service availability at a particular registrar.

6. Valuation of in-kind contributions

Company capital does not always consist only of cash. An investor may contribute real estate, equipment, intellectual property or another asset. The amendments provide for standards and requirements to value in-kind contributions across company types other than public joint stock companies, which remain under the Securities and Commodities Authority framework.

The Ministry's companies-legislation portal now lists Ministerial Decision No. 117 of 2026 concerning criteria and conditions for valuing in-kind interests and accrediting valuers.

A proper valuation helps protect:

• other shareholders from overvaluation;
• creditors relying on the stated capital;
• the company from ownership disputes;
• directors and founders approving the contribution; and
• investors requiring reliable financial information.

Accounting value, tax value, market value and the equity issued in exchange for an asset may differ. Obtain valuation, accounting and tax advice together.

7. Conversion between legal forms

The amended framework permits a company to convert from one legal form to another while retaining legal personality, subject to applicable procedures. This can help a growing LLC become a private or public joint stock company without treating the process as a completely new incorporation.

The Ministry explains that existing executive management may oversee a transition to a joint stock company without a new incorporation application or founders' committee unless the general assembly decides otherwise.

Before conversion, review:

• shareholder approval thresholds;
• capital and valuation requirements;
• governance and board composition;
• audited financial statements;
• creditor protection;
• employee and contract continuity;
• regulatory approvals; and
• tax consequences.

8. Mainland branches and representative offices for free-zone companies

The amendments allow companies established in free zones and financial free zones to conduct activity within the UAE mainland through branches or representative offices, subject to the required licences and approvals.

A branch may carry on approved business activity, while a representative office is generally limited to promotion, liaison or other non-trading functions permitted by the authority. The exact scope depends on the company, emirate, activity and regulator.

This federal development works alongside emirate-level initiatives such as Dubai's framework for eligible free-zone establishments to operate in Dubai. A free-zone licence alone still does not authorise unrestricted mainland activity.

9. UAE nationality of companies

The amendments clarify that existing and newly established UAE companies, including companies in free zones and financial free zones, continue to enjoy UAE nationality.

Company nationality should not be confused with:

• shareholder nationality;
• foreign-ownership restrictions for strategic activities;
• tax residence;
• customs origin of products; or
• eligibility for every government contract or incentive.

Each of those questions has its own legal test.

10. Non-profit commercial companies

The decree introduces the concept of a non-profit commercial company. Net profits from economic activity are reinvested to achieve the company's founding objectives rather than distributed to partners or shareholders.

The Cabinet is expected to define the permitted purposes, legal forms, conditions and any exemptions. The concept can support social-impact projects, research and development, education, health, innovation and similar initiatives, but detailed implementing rules must be checked before selecting this form.

11. Shares of a deceased partner or shareholder

The amendments address disposal of interests held by a deceased partner or shareholder. Other partners, shareholders or the company can receive priority to purchase the interest at a value agreed with the heirs. Where no agreement is reached, the competent court may determine the value with expert assistance.

This makes succession planning especially important. Companies should review:

• memorandum and shareholder-agreement provisions;
• valuation methods;
• funding for a buyout;
• key-person insurance;
• family-business arrangements;
• wills and estate planning; and
• interim voting and management rules.

12. LLC management vacancies

The amendments introduce mechanisms intended to prevent an LLC from becoming paralysed when a general manager's or board of managers' term expires.

According to the Ministry's explanation:

• the existing manager or board may continue for up to six months after expiry;
• the general assembly must then appoint a manager or form a board;
• the competent authority may intervene in coordination with relevant regulators if the vacancy continues; and
• a temporary manager can be selected from partners, other persons or specialised management firms under the applicable controls.

Companies should not rely on emergency continuity as a normal governance practice. Calendar management terms and renew appointments on time.

What LLC owners should review now

1. Check whether the existing memorandum supports current funding and exit plans.
2. Identify whether multiple interest classes could help a planned investment.
3. Align drag-along and tag-along clauses across the memorandum and shareholder agreement.
4. Review manager appointment and expiry dates.
5. Document succession arrangements.
6. Assess whether another emirate or regulatory system better supports the business.
7. Confirm when the relevant authority implements the required service.
8. Do not amend documents until the permitted classes and procedure are confirmed.

What investors should review

• the exact class and rights of the proposed interest;
• priority on dividends and liquidation;
• voting and reserved matters;
• transfer restrictions and exit rights;
• dilution protection;
• valuation of non-cash contributions;
• authority approval and registration;
• interaction between constitutional and private agreements; and
• tax, accounting and beneficial-owner reporting.

Implementation should be checked authority by authority

The amendments establish the federal legal framework, but a transaction may still require:

• a Cabinet or ministerial decision;
• Securities and Commodities Authority rules;
• local economic-department procedures;
• free-zone or financial-free-zone approval;
• regulated-activity approval;
• amended constitutional documents;
• publication or creditor notices; and
• updates to tax, UBO, banking, immigration and labour records.

Before restructuring, obtain written confirmation of the live procedure from both the existing and proposed authorities.

Common misunderstandings

• Assuming every LLC can issue any share class immediately.
• Treating registration transfer as a simple address change.
• Believing contracts never require counterparty consent after a transfer.
• Using drag-along wording without protecting minority holders.
• Assuming a free-zone branch may perform every mainland activity.
• Contributing an asset without an approved valuation.
• Confusing company nationality with unrestricted foreign ownership.
• Forming a “non-profit commercial company” before detailed rules are available.
• Ignoring tax and UBO consequences of restructuring.
• Allowing manager appointments to expire.

2026 company-law review checklist

1. Confirm the company's legal form and competent authority.
2. Review the current memorandum and shareholder agreement.
3. Map existing ownership and voting rights.
4. Identify planned fundraising, exit or succession events.
5. Assess whether differentiated interests are commercially useful.
6. Review drag, tag, pre-emption and deadlock provisions.
7. Confirm manager and board terms.
8. Review in-kind contributions and valuation evidence.
9. Consider whether conversion or registration transfer supports growth.
10. Check the relevant implementing decisions.
11. Obtain authority and regulator confirmation.
12. Model legal, tax, accounting and operational consequences.
13. Approve and register amendments correctly.
14. Update UBO, tax, bank and company records.

Official references

• Ministry of Economy and Tourism: Review of the Commercial Companies Law amendments
• MoET: Federal Decree-Law No. 20 of 2025 amendment overview
• Ministry of Economy and Tourism: Companies legislation portal
• Ministerial Decision No. 83 of 2026: Private-company share restriction periods
• UAE Government: Full foreign ownership of commercial companies

Need help reviewing how the amended company law affects your UAE structure? Call Al Shamil Zone on 800 2794, contact us through WhatsApp, or email info@shamilservices.ae.

This article provides general information and is not legal, tax or investment advice. The Arabic legislation and applicable implementing decisions prevail. Obtain current authority confirmation and professional advice before restructuring a company or changing shareholder rights.