The UAE's Commercial Companies Law has undergone significant reforms that took effect on 1 January 2026, introducing greater flexibility in corporate structuring while tightening compliance requirements. Federal Decree-Law No. 20 of 2025 reshapes how companies are organized, governed, and financed—changes that affect everything from ownership arrangements to capital raising and succession planning.
Key Changes That Matter
More flexible ownership structures. Onshore limited liability companies and private joint stock companies can now issue multiple classes of shares with different voting rights, dividend priorities, and liquidation preferences. This brings onshore entities closer to international practice and reduces the need to use offshore or free zone vehicles for venture capital-style arrangements.
Clearer M&A mechanics. Drag-along and tag-along rights—previously enforceable only through shareholder agreements—now have statutory recognition. The law also formalizes mechanisms for shareholder succession, allowing companies to pre-agree valuations for shares of deceased members or establish buyback arrangements.
Cross-emirate mobility. Companies can now transfer their registration between UAE licensing authorities (including between mainland and free zones) while retaining the same legal entity. This was previously impossible without dissolving and re-establishing the company.
Non-profit entities. For the first time, the law formally recognizes non-profit companies—vehicles where profits must be reinvested rather than distributed to shareholders.
Enhanced governance. Directors now have explicit duties to act with due care and in the company's best interests. The law also mandates improved record-keeping, including board minutes and conflict-of-interest registers.
What This Means
- Reassess your corporate documents now. The new share class and governance rules create opportunities, but only if your articles of association are updated. Review your constitutional documents and consult with legal counsel to ensure you're capturing available flexibility.
- Update compliance frameworks. Expanded shareholder protections and enhanced disclosure requirements—particularly around beneficial ownership—require refreshed internal controls and governance policies.
- Reconsider your corporate structure. If you previously used DIFC, ADGM, or free zone entities primarily to achieve flexible ownership or minority protections, onshore structures may now offer equivalent functionality with potentially lower compliance costs.