In October 2025, the United Arab Emirates enacted Federal Decree-Law No. 20 of 2025, amending selected provisions of Federal Decree-Law No. 32 of 2021 concerning Commercial Companies. The amendments, which entered into force on 15 October 2025, do not amount to a wholesale reform of the law. Instead, they address specific areas where legislative clarification or practical adjustment was required, particularly in relation to company mobility, capital structuring, valuation of in-kind contributions, shareholder rights, and continuity of management.

Non-Profit Companies

Amended Article (8) recognises the possibility of establishing non-profit companies, subject to Cabinet decisions regulating their purposes and legal framework. This amendment reflects the increasing diversity of corporate structures used in practice, including holding vehicles, special-purpose entities, and socially oriented organisations.

Constitutional Documents and Shareholder Arrangements

One of the most commercially significant amendments appears in Article (14). The amended article expressly allows partners in limited liability companies and shareholders in private joint stock companies to include advanced shareholder arrangements directly in the articles of association.

These arrangements include, among others, compulsory sale rights (drag-along rights), tag-along rights, and detailed mechanisms governing the transfer of shares or shares upon the death of a partner or shareholder. By permitting these provisions to be embedded in constitutional documents, the amendment enhances enforceability and reduces reliance on separate shareholder agreements that may be difficult to enforce against third parties or successors.

Flexibility in Capital Structures of Limited Liability Companies

Amended Article (76) introduces express statutory recognition of different classes of partners’ shares in limited liability companies. The article permits shares to be classified into categories with varying rights relating to voting, profit distribution, liquidation priority, redemption, and other agreed privileges or restrictions, provided such classifications are set out in the company’s articles and recorded in the commercial register.

This amendment is particularly significant for investment-driven structures, as it enables LLCs to adopt capital arrangements similar to preferred equity structures commonly used in other jurisdictions.

Restrictions on Transfer of Shares in Private Joint Stock Companies

Amended Article (266) revises restrictions on the transfer of shares in private joint stock companies during the initial period following incorporation. While maintaining a general lock-up period, the article introduces exemptions and grants regulatory authorities discretion to amend or waive the restriction period in appropriate cases. Moreover, private joint stock companies which list its shares on the stock market are exempted from the lock-up period.

These changes improve liquidity for shareholders and facilitate private placements and listings, while preserving investor protection mechanisms.

Transformation of Companies and Corporate Growth

Amended Article (275) significantly simplifies the process of transforming a company from one legal form to another, particularly into a joint stock company. The article allows transformation without the need to submit a new incorporation application or form a founders’ committee, while preserving the company’s legal personality throughout the process.

This streamlined approach facilitates corporate growth, restructuring, and access to capital markets.

Company Migration and Retention of Legal Personality

The introduction of Article (15 bis) establishes, for the first time, a comprehensive statutory framework for company migration within the UAE. The article allows companies to transfer their commercial registration between competent authorities, including migration between free zones and the mainland, while retaining their legal personality, subject to regulatory approvals and publication requirements.

This provision enables corporate relocation and restructuring without dissolution, significantly reducing legal and operational risk.

Implications for Businesses

Taken together, the amendments introduced by Federal Decree-Law No. 20 of 2025 reflect a deliberate and pragmatic legislative approach. Rather than rewriting the Commercial Companies Law, the UAE has refined its corporate framework in response to practical experience, market needs, and international best practices.

For companies operating in the UAE, these amendments create meaningful opportunities to restructure ownership, modernise constitutional documents, improve capital arrangements, and plan for growth or transformation. At the same time, they underscore the importance of careful legal review and compliance, particularly in relation to valuation, governance, and shareholder rights.

For further information on how the 2025 amendments to the UAE Commercial Companies Law may affect your business, including restructuring, governance, and investment considerations, please contact

Ahmed Hadeed
a.hadeed@hadeedpartners.ae

This article is current as of December 2025 and is intended for general information purposes only. It does not constitute legal advice. For specific guidance on your transaction, please contact our team.

© Hadeed & Partners 2025