TRW & Co · Corporate & Commercial
Corporate Governance in the UAE
Corporate governance in the UAE sets how companies are directed and controlled, from LLC memoranda to the listed company governance guide. Recent reforms added a governance code for private joint stock companies, an executive-chair option for listed boards, share classes for LLCs and a new Capital Market Authority, raising expectations for every business.
Key pointSince August 2025, a listed UAE company may combine the chair and chief executive roles, but only with shareholder approval, a board at least 75% independent and wholly independent committees.
At a glance
Statutory basis
Article 6 of the Commercial Companies Law lets the Minister and the listed-company regulator issue governance rules; breaches can attract fines of up to AED 10 million.
Private JSC code
Ministerial Decision No. 137 of 2024 requires one-third independent directors, a non-executive majority, at least one woman and audit and remuneration committees.
Executive chair allowed
SCA Resolution No. 24 of 2025, effective 26 August 2025, permits a combined chair and CEO in listed companies, subject to strict independence safeguards.
New capital markets regulator
The Capital Market Authority replaced the SCA on 1 January 2026; existing SCA resolutions continue until replaced if consistent with the new laws.
Company law modernised
Federal Decree-Law No. 20 of 2025 added LLC share classes, drag and tag rights, deadlock appointments and redomiciliation, some awaiting implementing rules.
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What corporate governance in the UAE covers
Corporate governance in the UAE is the system of rules, structures and habits that decides who controls a company, how decisions are made and how those in charge are held to account. It covers board composition and committees, shareholder rights, related-party dealings, internal controls, disclosure and the relationship between owners and management.
The law sets a floor that rises with the type of company. A private LLC has a light statutory framework and relies mainly on its memorandum of association. A private joint stock company has a ministerial governance code. A listed public joint stock company follows a detailed regulator's guide. Banks, insurers and DIFC or ADGM authorised firms add sector rules on top.
Governance stops being theoretical when something tests it: an investor's due diligence, a bank's credit review, a shareholder dispute, a succession in a family business, a regulator's inspection or an IPO. Companies that have built governance in advance move through these events faster and on better terms.
The legal framework for corporate governance in the UAE
The starting point is Article 6 of Federal Decree-Law No. 32 of 2021 on Commercial Companies. It gives the Minister of Economy power to issue governance rules for companies other than public joint stock companies, gives the regulator's board that power for public joint stock companies, and preserves the Central Bank's own requirements for the institutions it supervises. The board of directors or managers is responsible for implementing the rules. Under Article 7, breaches can attract fines of up to AED 10 million on companies, chairs, board members, managers and auditors.
For listed companies the regulator is now the Capital Market Authority. Federal Decree-Law No. 32 of 2025 reconstituted the Securities and Commodities Authority as the Capital Market Authority from 1 January 2026. Existing SCA resolutions, including the governance guide, continue to apply until replaced, provided they do not conflict with the new laws.
The financial free zones run their own systems. The DIFC and ADGM have English-style companies laws with codified directors' duties, and their financial regulators, the DFSA and the FSRA, impose governance requirements on authorised firms. Banks and insurers licensed onshore follow governance regulations and standards issued by the Central Bank of the UAE.
Public joint stock companies
Listed and public joint stock companies follow the SCA Chairman's Decision No. 3/R.M of 2020 on the Governance Guide of Public Joint Stock Companies. Chairman's Board Resolution No. 24 of 2025, effective 26 August 2025, amended it to permit a combined chair and chief executive where the articles allow and shareholders approve by special resolution. In that case at least 75% of the board must be independent, permanent committees must be wholly independent, a new independent governance committee evaluates the combined role annually and the vice-chair must be independent.
Private joint stock companies
Ministerial Decision No. 137 of 2024, in force since 15 August 2024, governs the registration, regulation and governance of private joint stock companies. It requires at least one-third independent members, a majority of non-executive members and at least one woman on the board, the last applying as current board terms end. It also requires audit and nomination and remuneration committees chaired by independent members, an independent internal audit function, written delegations of authority, whistleblowing channels and a governance report filed before the annual general assembly.
Limited liability companies
LLCs have no governance code of their own. The memorandum of association, the managers' powers and the general assembly do most of the work. Where an LLC has more than 15 partners, Article 88 requires a supervisory board of at least three partners. Every LLC must appoint an auditor annually. Family-owned businesses can add a family charter under Federal Decree-Law No. 37 of 2022 on Family Businesses; see family business governance.
| Company type | Main source | Board and committees | Supervisor |
|---|---|---|---|
| Mainland LLC | Commercial Companies Law; memorandum of association | One or more managers or a board of managers; supervisory board if more than 15 partners; annual auditor | Emirate licensing authority; Ministry of Economy and Tourism |
| Private joint stock company | Ministerial Decision No. 137 of 2024 | 3 to 11 members; one-third independent, majority non-executive, at least one woman; audit and nomination and remuneration committees | Ministry of Economy and Tourism and licensing authority |
| Public joint stock company | SCA Decision No. 3/R.M of 2020, as amended by Resolution No. 24 of 2025 | Independent committees; executive chair permitted only with 75% independent board and a governance committee | Capital Market Authority |
| Bank or insurer (onshore) | Central Bank governance regulations and standards plus company law | Fit-and-proper approval of board appointments; risk, audit and other committees | Central Bank of the UAE |
| DIFC or ADGM company | DIFC Companies Law or ADGM Companies Regulations 2020; DFSA or FSRA rules for authorised firms | Codified directors' duties; additional rules for regulated firms | DIFC or ADGM Registrar; DFSA or FSRA |
Key governance decisions for boards and shareholders
Board composition and independence
Joint stock company boards must have between three and eleven members, serving terms of no more than three years (Article 143), and a secretary who is not a board member. Beyond the statutory floor, the right mix of independent, non-executive and shareholder-nominated directors depends on ownership. A founder-controlled company may need independents to reassure minority investors and lenders; a joint venture may need a balanced board with clear casting-vote rules.
Where control rights should sit
The 2025 amendments to the Commercial Companies Law, made by Federal Decree-Law No. 20 of 2025, let mainland LLCs issue share classes and expressly recognise drag-along and tag-along rights in the constitutional documents. This allows reserved matters, voting rights and exit rights to sit in the memorandum, where they bind the company and are registered, rather than only in a shareholders' agreement. The detailed rules on classes depend on Cabinet regulations, so check their current status. See our shareholder agreements page.
Deadlock and continuity
The amendments also address deadlock: where shareholders cannot agree on board appointments, the licensing authority may appoint independent, non-shareholder directors for up to one year. Article 85 already lets an LLC board of managers continue for up to six months after its term expires, after which the authority may appoint a board for up to a year. Most investors would rather solve deadlock themselves, through escalation, mediation and buy-sell mechanisms written into the documents.
Remuneration and minority protection
Joint stock company board pay is capped at 10% of net profit after depreciation and reserves (Article 171), and the private joint stock company code adds that attending meetings alone earns no remuneration. Linking executive pay to audited results and clawback terms is good practice for any company with outside investors.
Minority protection is part of governance, not only of litigation. In joint stock companies, holders of 5% can apply to the regulator if the company's affairs are conducted to their detriment, and holders of 10% can bring a derivative claim against a related party after giving the board 30 days to act. Designing information rights, reserved matters and fair exit routes up front reduces the chance that minorities reach for these remedies. Our shareholder disputes page explains what happens when they do.
Corporate governance in the UAE is increasingly tested by banks and investors rather than regulators. A private company with a functioning board, minuted decisions, an internal audit plan and a related-party policy can usually answer due diligence questions in days, while a company run informally by its founder may spend months reconstructing its records.
Building a governance framework: step by step
Whether you are preparing for investment, a listing or simply growth, the following sequence produces a framework that works in practice.
- Diagnose the starting point. Review the constitutional documents, shareholder agreements, board composition, delegations and recent minutes against the rules that apply to the company type and sector.
- Set the board structure. Decide the size, the balance of independent and non-executive members, the chair's role and which committees are needed, meeting any statutory minimums.
- Allocate authority. Draft a delegation-of-authority matrix that separates shareholder reserved matters, board matters and management authority, with financial limits.
- Adopt core policies. Approve policies on conflicts of interest and related-party transactions, internal audit, risk management, whistleblowing, insider dealing for listed companies and disclosure.
- Align the constitutional documents. Amend the memorandum or articles to reflect share classes, reserved matters, transfer restrictions and deadlock mechanisms, and register the changes with the licensing authority.
- Embed and report. Set an annual board calendar, conduct board evaluations, prepare the governance report where required and review the framework each year.
Core governance documents
A well-governed UAE company can produce the following quickly. Investors, lenders and regulators will ask for most of them:
- Memorandum and articles of association, up to date and registered
- Shareholders' agreement or joint venture agreement, consistent with the constitution
- Board and committee charters, including terms of reference for audit and nomination and remuneration committees
- Delegation-of-authority matrix
- Conflict-of-interest and related-party transaction policy, with a register of declared interests
- Internal audit charter and annual plan; risk register
- Whistleblowing policy and reporting channels
- Board minutes, written resolutions and annual governance report where required
- Beneficial ownership and shareholder registers
Registers matter as much as policies. Our page on the UBO register explains what each entity must hold and file.
Risks and common mistakes
Governance on paper only
Many companies adopt policies at the time of an investment and never use them. Committees do not meet, conflict registers are not updated and the delegation matrix is ignored. In a dispute or investigation, a policy that was not followed is worse than no policy, because it shows the board knew the standard and departed from it. Keep the framework proportionate to the business, and build it into the board calendar so it is actually operated.
Shareholders' agreement out of step with the constitution
Investors often rely on reserved matters and transfer restrictions in a shareholders' agreement that the memorandum does not reflect. Onshore, a licensing authority will act on the registered memorandum, and third parties may rely on it. With share classes and drag and tag rights now recognised in the law, there is less reason for the gap. Align the documents, register the changes, and make the agreement say which prevails between the parties.
Informal related-party dealings
Family and founder-led groups frequently trade between companies owned by the same people, lease property from shareholders or pay management fees to a parent. Joint stock companies must obtain board approval for related-party transactions up to 5% of capital and general assembly approval above it, with disclosure. Even in an LLC, undocumented related-party dealings undermine valuations, create transfer pricing risk for corporate tax and expose managers to claims. Keep a register and approve each transaction at the right level.
Ignoring the 2026 regulator change
Listed companies and their advisers should note that the Capital Market Authority has replaced the SCA. Existing resolutions remain in force until replaced, but new capital markets legislation took effect on 1 January 2026, and entities covered must regularise their status by 1 January 2027 unless that deadline is extended. Review disclosure, insider and governance procedures against the new framework rather than assuming nothing has changed.
Boards without the right skills
A board composed entirely of shareholders' representatives may lack financial, risk or sector expertise. The private joint stock company rules require diverse skills and at least one audit committee member with finance or accounting experience. Banks and investors increasingly ask about board skills and evaluation. A skills matrix and periodic evaluation, with targeted independent appointments, usually fixes the gap.
What changed in 2025–26
The last two years reshaped corporate governance in the UAE. The Ministry of Economy was renamed the Ministry of Economy and Tourism in 2025. Ministerial Decision No. 137 of 2024 gave private joint stock companies a full governance code, including the requirement for a woman on the board. SCA Resolution No. 24 of 2025 opened the door to executive chairs in listed companies, but only with a strongly independent board.
Federal Decree-Law No. 20 of 2025 modernised the Commercial Companies Law with share classes, drag and tag rights, deadlock appointments, succession clauses, private placements by private joint stock companies, non-profit companies and redomiciliation between emirates and between the mainland and free zones. Several of these depend on implementing regulations. Read our briefing on the Commercial Companies Law amendments.
From 1 January 2026, Federal Decree-Laws No. 32 and 33 of 2025 replaced the SCA with the Capital Market Authority and introduced a new capital markets law, with enhanced provisions on prospectus liability and whistleblower protection. Companies planning a listing should read our IPOs and listings page.
Good corporate governance in the UAE is no longer a listing requirement alone. Private companies, family groups and joint ventures are now expected to show it.
Cross-border groups and governance
International groups often apply a head-office governance model to their UAE subsidiaries. That works if it is translated into UAE terms: the UAE entity's own board must actually take its decisions, approve its own related-party transactions and meet local requirements on committees, auditors and registers. A UK or Singapore parent's policies are a good base but do not replace the local constitution.
Bangladesh, India and Saudi Arabia each have their own codes for listed and regulated companies, and dual-listed or cross-border groups must reconcile them. Family groups with members in several countries benefit from a single family charter and holding structure, often in the DIFC or ADGM, that sits above the operating companies. Our family offices page discusses those structures.
Joint ventures with GCC or Asian partners raise particular issues on board balance, reserved matters and information rights. See joint ventures in the UAE for the deal-specific points.
How TRW & Co helps
We design and review corporate governance in the UAE for private companies, family groups, joint ventures and companies preparing to list. Where representation before UAE onshore courts or the DIFC/ADGM Courts is required, we work alongside locally licensed advocates and registered practitioners.
Governance diagnostics
We benchmark your current structure against the rules for your company type and sector and give a prioritised list of gaps and fixes.
Board and committee design
We advise on board size, independence, committees and charters, including private joint stock company requirements and the executive-chair model for listed companies.
Constitutional drafting
We redraft memoranda and articles to use share classes, reserved matters, drag and tag rights and deadlock solutions, and coordinate registration.
Policies and controls
We draft delegation-of-authority matrices, related-party, conflict, whistleblowing and disclosure policies that fit the business rather than a template.
Pre-investment and pre-IPO readiness
We prepare governance for due diligence and listing, aligning documents, registers and processes with investor and Capital Market Authority expectations.
Disputes and remediation
Where governance has failed, we advise boards and shareholders on investigations, remedies and restructuring the framework to prevent a repeat.
Learn more about directors' duties and liability, browse our practices, or contact our Dubai team.
Checklist for decision-makers
- Do you know which governance rules apply to each entity: LLC, private or public joint stock company, regulated firm, DIFC or ADGM?
- Does the board meet any statutory composition rules, including independence and the woman-director requirement for private joint stock companies?
- Is there a delegation-of-authority matrix that management actually follows?
- Are related-party transactions registered and approved at the right level?
- Do the memorandum or articles reflect the deal in the shareholders' agreement, including any share classes and drag and tag rights?
- Is there a deadlock mechanism that avoids reliance on authority-appointed directors?
- Are internal audit, whistleblowing and risk functions in place and reporting to the board?
- Has the company reviewed its position following the Capital Market Authority's replacement of the SCA, if listed or planning to list?
Corporate governance in the UAE pays for itself the first time a bank, buyer or regulator asks how decisions are made.
Frequently asked questions
01Does a private LLC need a formal governance framework?
The law requires relatively little: managers appointed under the memorandum, an annual general assembly, an auditor elected every year and, if there are more than 15 partners, a supervisory board. But banks, investors and buyers increasingly expect more. A short delegation-of-authority matrix, a related-party policy, minuted management decisions and a clear shareholders' agreement aligned with the memorandum are usually enough for a growing LLC and make due diligence much easier.
02What governance rules apply to private joint stock companies?
Ministerial Decision No. 137 of 2024, in force since 15 August 2024, sets the rules. Boards must reflect diverse skills, include at least one-third independent members, have a non-executive majority and include at least one woman, with the gender requirement applying as board terms end. Audit and nomination and remuneration committees are required, chaired by independent members. The company also needs independent internal audit, written delegations, whistleblowing channels and an annual governance report.
03Can the chair of a listed UAE company also be the CEO?
Yes, since SCA Chairman's Board Resolution No. 24 of 2025 took effect on 26 August 2025, provided the articles permit it and shareholders approve by special resolution. Safeguards are strict: at least 75% of the board must be independent, permanent committees must be wholly independent, a new governance committee evaluates the arrangement annually, the vice-chair must be independent and the justification must be disclosed. The Capital Market Authority now administers these rules.
04What happened to the Securities and Commodities Authority?
Federal Decree-Law No. 32 of 2025 reconstituted the SCA as the Capital Market Authority, effective 1 January 2026, alongside a new capital markets law, Federal Decree-Law No. 33 of 2025. The CMA succeeded to the SCA's rights and obligations, and existing SCA resolutions continue to apply where consistent with the new laws until replaced. Covered entities have until 1 January 2027 to regularise their position unless the CMA extends the deadline.
05How do the 2025 company law amendments affect governance?
Federal Decree-Law No. 20 of 2025 lets LLCs create share classes with different voting and economic rights, recognises drag-along and tag-along rights in constitutional documents, allows succession provisions, and lets licensing authorities appoint independent directors for up to a year where shareholders are deadlocked on board appointments. Governance rights can now be built into the registered constitution rather than only a private agreement. Several provisions await implementing regulations, so check the current position.
06Are DIFC and ADGM companies subject to UAE governance codes?
DIFC and ADGM companies are governed by their own companies laws, which codify directors' duties on the English model, rather than by the Commercial Companies Law. Firms authorised by the DFSA or FSRA must also meet those regulators' governance requirements, and listed companies on their markets follow the relevant listing rules. Where a DIFC or ADGM holding company owns onshore subsidiaries, each subsidiary must still meet onshore requirements for its own company type.
Sources and official materials
- Federal Decree-Law No. 32 of 2021 on Commercial Companies — Articles 6-7 on governance and board rules
- Capital Market Authority — Regulator of listed companies and governance guide
- Ministry of Economy and Tourism: Companies Legislation — Private joint stock company and company law decisions
- Central Bank of the UAE — Governance rules for banks and insurers
- ADGM Rules and Regulations — ADGM Companies Regulations 2020
- DIFC — DIFC companies regime and registrar
General information only, current as at 27 October 2026. It is not legal advice and does not create a lawyer–client relationship. UAE law differs between the onshore jurisdiction, the DIFC, ADGM and the free zones, and changes frequently; check current official sources and take advice on the facts of your matter.
