The UAE has issued Federal Decree-Law No. 20/2025 (the 2025 Amendments) to amend key provisions of Federal Law No. 32/2021 (the Commercial Companies Law). Many common law provisions have been integrated into the UAE’s civil law system in line with international standards providing great clarity and flexibility to companies and company owners. These amendments aim to enhance the ease of doing business and attract more investment to the UAE market, making professional commercial legal advisory increasingly important for business owners and investors.
A brief of some of the amendments that came into effect on 15th October 2025:
Scope of the Commercial Companies Law & Nationality
The 2025 Amendments confirms that the provisions of the Commercial Companies law apply to branches and representative offices of free zone companies licensed in the mainland. For companies established in free zones and financial free zones, the provisions of the Commercial Companies Law may apply in addition to the free zone’s own legislation. As such it is now important for free zone companies to consider if the Commercial Companies Law will apply to them or not, with guidance from experienced UAE commercial law services to ensure regulatory compliance. The 2025 Amendment also clarifies that all kinds of companies established in the UAE – including the ones licensed in the free zone and financial free zones shall hold the nationality of the UAE. This is a significant development for tax purposes, as it confirms that free zone entities are ‘UAE Persons’ eligible for the benefits of the UAE’s extensive network of Double Taxation Treaties and Corporate Tax reliefs.
Shareholder arrangements & Share Transfers
Limited liability companies and Private joint stock companies may now include rights like “drag-along and tag along” in their Memorandum of Association. This brings common M&A protections into onshore entities as well. It is important to note that while these rights can now be in the MOA, their exercise in an LLC remains subject to statutory pre-emption regimes unless specifically waived in the constitutional documents. In the past, if a partner died, their shares would go to their heirs and the remaining partners might suddenly find themselves in business with the deceased partner’s children or relatives, who might not know anything about the business. However, as per the 2025 Amendments, the remaining partners (or the company itself) get the first chance to buy those shares from the heirs. The remaining partners and the heirs should try and agree on a price and if this cannot be agreed, they can approach the Court, which will appoint an expert to decide exactly what the shares are worth, a process where corporate and commercial law services play a critical role in protecting shareholder interests.
Capital & Class of Shares
As per the 2025 Amendment, the Minimum share capital can be set by the competent authority upon ministerial recommendation and Cabinet approval, and Contributions may be in cash and/ or in kind and shall be paid in full at the time of incorporation. Capital contributions in cash shall be deposited into a bank licensed in the UAE, requiring careful compliance under UAE commercial law regulations.
The partners shares may be classified into different categories or classes with different rights & obligations – in terms of value, voting rights, redemption rights, priority in the distribution of profits or liquidation in the Memorandum of Association. Each share’s category, rights, privileges, and any imposed restrictions shall be recorded in the Commercial Register.
This would no doubt expand private capital structuring options in LLCs across the mainland.
Re-domicile & Conversion of companies
According to a new Article added under no. 15 bis a company may, by a special decision of the General Assembly, or with the approval of an absolute majority of the partners, migrate its registration in the Commercial Register from one Competent Authority to another, while retaining its legal personality in accordance with the provisions of the Commercial Companies Law. As such, companies a company may (subject to compliance of the relevant requirements) may transfer its registration from the mainland to the free zone or vice versa.
Any Company may now be converted from one form into another, while keeping its legal personality, in accordance with the provisions of the Commercial Companies Law and the relevant regulations and decisions regulating the conversion of companies issued by the Ministry or the Authority, each within its own competencies.
Non-profit companies
The Definitions of the Company have now been amended to add a new kind of company- “Non-Profit Company”. The incorporation of a non-profit company whose net profits arising from its economic project are reinvested in achieving the purposes for which it was established, without distributing such profits to its partners or shareholders, provided that a decision is issued by the Cabinet, upon the suggestion of the Minister and in coordination with the Competent Authority, specifying those purposes and regulating the provisions and forms of such companies, opening new avenues for non-profit structuring under UAE commercial law services.
Governance- Management Continuity
The 2025 Amendments has introduced magnificent changes which prevents businesses from freezing up by allowing the manager or board to stay in power for 6 months even after their term ends. In the event when a manager resigns from his position, the shareholders have to make a decision within 30 days of receipt of such resignation.
If the shareholders cannot agree on a new manager to be appointed, the licensing authorities can step in and appoint an outside professional to run the company for up to one year. This new insurance policy safeguards the company against a corporate analysis, and that the company’s employees, creditors, and daily operations are protected by mandatory transition periods and government-backed interim management.
The 2025 Amendments represent a strategic leap in modernizing the country’s corporate landscape by integrating common-law flexibility—such as multiple share classes, statutory shareholder rights, enhanced succession options, management provisions and company re-domiciliation—directly into the civil law system. These reforms make it significantly easier for businesses to operate and for investors to participate in the UAE while maintaining legal stability through a more sophisticated framework, best navigated with expert corporate and commercial law services.
For business owners, these changes offer greater clarity; it is now simpler to configure companies in ways that attract venture capital and private equity. Investors can take comfort in stronger governance and more predictable exit options, which materially reduce risk.
Ultimately, these amendments move the UAE away from “workaround” solutions and closer to international best practices. This reflects a deep commitment to a robust legal environment that encourages innovation, protects stakeholders, and cements the UAE’s position as a premier global investment destination.
This is a general guide on the subject matter and should not be construed as specific legal advice.
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Senior Legal Consultant, Corporate & Commercial