TRW & Co · Corporate law update
UAE Commercial Companies Law Amendments: What Businesses Need to Know
The UAE Commercial Companies Law amendments, made by Federal Decree-Law No. 20 of 2025 and in force since late 2025, let LLCs issue share classes, allow drag, tag and succession terms in the constitution, permit redomiciliation within the UAE and clarify the law's reach to free zone branches. Here is what changed, what is still pending and what to update.
Key pointSeveral headline reforms, including LLC share classes, private placements and transfers involving the DIFC and ADGM, depend on implementing decisions; use the self-executing changes now and plan, but hold, structures that rely on rules you have not yet seen.
At a glance
In force since October 2025
Federal Decree-Law No. 20 of 2025 was issued in October 2025 and took effect in late 2025, after publication in the Official Gazette.
Share classes for LLCs
LLCs may issue share classes differing in value, voting, redemption and distribution priority if the memorandum allows and classes are recorded in the commercial register.
Drag, tag and succession
LLCs and private joint stock companies may include drag-along, tag-along and deceased-shareholder buy-out terms in their constitutional documents, subject to LLC pre-emption.
Redomiciliation allowed
Companies may move registration between emirates, free zones and the mainland while keeping legal personality, if both authorities permit and approvals are obtained.
Free zone branches covered
Free zone companies operating on the mainland must do so through a mainland branch or representative office, which is subject to the Commercial Companies Law.
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UAE Commercial Companies Law amendments: the short answer
As of October 2026. The UAE Commercial Companies Law amendments were made by Federal Decree-Law No. 20 of 2025, issued in October 2025 and in force since late 2025. They amend Federal Decree-Law No. 32 of 2021, the main onshore companies statute.
The headline changes: LLCs may issue classes of shares with different rights; LLCs and private joint stock companies may put drag-along, tag-along and succession mechanics into their constitutional documents; companies may move their registration between emirates, free zones and the mainland without losing legal personality; non-profit companies are recognised; private joint stock companies may raise capital by private placement; and the scope of the law is clarified to cover foreign companies operating in the UAE and branches of free zone companies working onshore.
Several of these changes depend on implementing decisions from the Cabinet, the Ministry of Economy and Tourism or the Capital Market Authority (CMA), which replaced the Securities and Commodities Authority from 1 January 2026. If you run, invest in or advise an onshore company, the immediate task is to review the memorandum or articles, the shareholders' agreement and any group restructuring plans. For ongoing governance advice, see our corporate governance practice page.
What changed: the amendments in detail
| Change | Who it affects | Status of detail |
|---|---|---|
| Share classes in LLCs | LLCs whose memorandum allows it; classes recorded in the commercial register | Cabinet decision on classes anticipated |
| Drag-along, tag-along and succession | LLCs and private joint stock companies | Effective through constitutional documents; LLC pre-emption still applies |
| Redomiciliation within the UAE | Companies moving between emirates, free zones and the mainland | Requires both authorities' rules; financial free zones subject to Cabinet controls |
| Non-profit companies | Companies reinvesting all profits in their objects | Cabinet rules anticipated |
| Private placements | Private joint stock companies | CMA (formerly SCA) controls anticipated |
| In-kind contributions | Companies other than public joint stock companies | Ministry valuation standards anticipated |
| Scope and branches | Foreign companies in the UAE; free zone companies operating onshore | Effective; onshore activity requires a mainland branch or office |
| Deadlock on board appointments | Companies whose shareholders cannot agree on appointments | Licensing authority may appoint independent directors for a limited period |
Share classes for LLCs
Before the amendments, an onshore LLC's shares carried equal rights. Now an LLC may issue classes that differ in value, voting rights, redemption rights and priority in distributions, provided the memorandum allows it and each class and its rights are recorded in the commercial register. The Minister of Economy described the UAE as among the first countries in the region to allow multiple quota classes for LLCs.
For investors, this brings preference shares, non-voting classes and redeemable instruments into the onshore LLC. For founders, it opens up employee and family structures that previously required a DIFC or ADGM holding company.
Drag-along, tag-along and succession
The memorandum or articles of an LLC or private joint stock company may now include drag-along and tag-along rights, and mechanisms for dealing with a deceased shareholder's shares, including a right for others to buy them at a price agreed with the heirs or, if there is a dispute, set by the court. In an LLC, statutory pre-emption continues to apply, so well-drafted documents include an express waiver for these sales. See shareholders' agreements in the UAE.
Redomiciliation between emirates and free zones
A company may transfer its registration from one licensing authority to another, including between the mainland and free zones in either direction, without dissolving and reincorporating. It keeps its legal personality, contracts and obligations. Both authorities must permit the move, the required approvals and publication must be completed, and transfers involving the financial free zones (DIFC and ADGM) are subject to controls to be set by the Cabinet with those authorities.
This is potentially the most useful change for groups. Previously, moving a business meant setting up a new entity, transferring assets, contracts, employees and licences, and liquidating the old company.
Scope, nationality and free zone branches
The amendments clarify that the law applies to UAE-incorporated commercial companies, to foreign companies operating in the UAE or establishing headquarters, branches or representative offices, and to branches or offices of free zone companies operating on the mainland. Where free zone rules allow activity outside the zone, the company must establish a mainland branch or representative office, which is subject to the law. Companies incorporated in the UAE, including in free zones and financial free zones, have UAE nationality.
Deadlock on board appointments
Where shareholders cannot agree on the appointment of the board, the licensing authority of the relevant emirate may appoint independent directors who are not shareholders for a limited period. This is a backstop rather than a dispute-resolution mechanism: it keeps the company functioning while shareholders resolve their differences. Most joint venture partners will want their own escalation, mediation and buy-sell provisions so that the regulator never needs to step in. See shareholder disputes.
Non-profit companies, private placements, in-kind capital and conversions
Companies may be set up to reinvest profits in their stated purposes without distributing them, under rules to be set by the Cabinet. Private joint stock companies may offer securities by private subscription under conditions set by the CMA (formerly the SCA), and the founders' lock-up regime has been made more flexible. In-kind contributions will be valued under standards issued by the Ministry with local authorities. Conversions between legal forms, including into joint stock companies and cooperatives, are simplified, with the company keeping its legal personality.
When the UAE Commercial Companies Law amendments take effect
The decree-law came into force in late 2025 after publication in the Official Gazette; commentaries differ on the exact day. Provisions that work through the company's own documents, such as drag, tag and succession clauses, and the clarified scope of the law, could be used from that date.
Other provisions depend on implementing measures: the Cabinet decision on share classes, the Cabinet rules on non-profit companies and on transfers involving financial free zones, the Ministry's valuation standards and the CMA's private placement controls. Commentary in early 2026 described these as still pending. As of October 2026, we have not been able to confirm from official sources that all of them have been issued, so check the current position with the Ministry of Economy and Tourism, the Capital Market Authority (which replaced the SCA from 1 January 2026) and the relevant licensing authority before relying on them.
The UAE Commercial Companies Law amendments do not set a general deadline for existing companies to amend their memorandum. The changes are largely enabling: they give companies new options rather than imposing new mandatory steps, with the important exception of free zone companies operating on the mainland without a branch.
Do not rebuild a structure on a provision whose implementing rules you have not seen. Use the amendments now where they operate through your own documents (drag, tag, succession), and plan, but do not yet execute, structures that depend on pending decisions, such as complex share classes or a move into or out of the DIFC or ADGM.
Who is affected and what to do
The UAE Commercial Companies Law amendments touch most onshore businesses, but in different ways. The table above shows the mechanics; this section turns them into action points by type of business.
Founders and investors
Revisit the cap table. Venture and private equity investors who previously insisted on a DIFC or ADGM holding company may now accept an onshore LLC with a preferred class, once the registration practice is settled. Align the shareholders' agreement and the memorandum on classes, drag and tag. See venture capital investments.
Family businesses
Succession clauses are now possible in the constitution of LLCs and private joint stock companies. Combined with the family business law and proper wills, this reduces the risk that a shareholder's death freezes the company. See family business governance.
Groups and free zone companies
Groups with a free zone company that serves mainland customers should check whether it needs a mainland branch or representative office. Groups considering consolidation should map which entities might redomicile instead of being liquidated. See corporate restructuring.
- Inventory your entities. List every UAE entity with its regime (mainland, free zone, DIFC or ADGM), licensing authority, shareholders and constitutional documents.
- Check free zone activity onshore. For each free zone entity, confirm whether it trades on the mainland and, if so, whether a mainland branch or office is required under the clarified scope.
- Review memoranda and SHAs. Identify where drag, tag, succession or pre-emption waivers should be added, and where existing shareholders' agreements now conflict with what the law permits.
- Plan, then implement, share classes. Design any class structure now but implement it once the registration practice and any Cabinet decision are confirmed.
- Assess redomiciliation. Compare redomiciliation with the traditional new-entity-and-liquidation route for any planned move, taking account of tax, licensing, employees and contracts.
- Update governance and filings. Reflect changes in the commercial register, UBO filings and board procedures, and brief managers on their duties.
Documents to update after the amendments
The angle most businesses miss is documentary. The UAE Commercial Companies Law amendments only help a company whose documents actually use them. Work through the following:
- Memorandum or articles of association. Add drag, tag and succession provisions, express pre-emption waivers for those sales, any share class rights and deadlock mechanics. Remove wording that now conflicts with the shareholders' agreement.
- Shareholders' agreement. Re-align reserved matters, leaver provisions and exit mechanics with what the constitution can now carry, so that rights are enforceable against the company and the notary, not only between shareholders.
- Commercial register entries. Record share classes and their rights where adopted, and keep manager and shareholder details current.
- UBO and nominee records. New classes and transfers may change who counts as a beneficial owner; update the register and filings accordingly.
- Group structure charts and intra-group agreements. Reflect any mainland branch of a free zone company and any planned redomiciliation, and check intercompany services and transfer pricing documentation.
- Powers of attorney and board procedures. Put in place powers that allow drag and succession transfers to complete before the notary, and minute the approvals behind every structural change.
For founder-led and family companies, also review wills and any family charter so that succession provisions in the constitution and the estate plan point the same way. For investor-backed companies, check that convertible instruments and option plans still work with any new class structure.
What did not change
It is equally important to know what the reform left alone. Managers' and board members' liability, the rules against distributing fictitious profits, the general assembly framework and the core requirements for each company form remain in place. LLC pre-emption on transfers to third parties survives. Onshore share transfers and constitutional amendments still go through notarial and licensing processes, and notaries will apply the documents as written.
The DIFC and ADGM continue to have their own companies regimes and courts, and other free zones keep their own regulations for companies that operate only within the zone. The UAE Commercial Companies Law amendments make the onshore regime more flexible; they do not replace those systems.
Illustrative scenario: consolidating a group
Illustrative only; generic parties. A trading group has a Dubai mainland LLC, an Abu Dhabi mainland LLC and a free zone company that invoices mainland customers. It wants a single onshore operating company and an investor-friendly cap table.
Under the amendments, it first confirms whether the free zone company's mainland sales require a mainland branch. It then explores redomiciling the Abu Dhabi LLC into Dubai, rather than transferring assets and liquidating, subject to both authorities' requirements. Finally, it prepares an amended memorandum with a preferred class for a new investor, but holds implementation until the licensing authority confirms how classes will be recorded. Each step is sequenced as a condition in the investment documents.
Risks and open questions
Pre-emption is still there
The amendments give drag and tag a statutory basis but do not remove LLC pre-emption rights. A drag-along that ignores pre-emption may be blocked. Include express waivers in the memorandum and the shareholders' agreement, and powers of attorney so transfers can be signed before the notary. Expect notaries to apply the documents literally.
Implementing rules may narrow the options
Cabinet and ministerial decisions on share classes, non-profit companies, valuation and financial free zone transfers may add conditions. A structure designed on the decree-law alone may need revisiting. Build flexibility into documents and avoid irreversible steps until the rules are confirmed.
Redomiciliation is not tax-neutral by default
Keeping legal personality simplifies contracts and licences, but corporate tax, VAT registration, free zone tax status and transfer pricing all need separate analysis. Coordinate with registered tax agents before moving an entity. See corporate tax in the UAE.
Interaction with the new Civil Transactions Law
The new Civil Transactions Law, in force from 1 June 2026, governs the contracts around these structures, including shareholders' agreements. Its good-faith and pre-contractual disclosure duties apply when shareholders negotiate new classes or exits. Read the two reforms together.
Manager duties are unchanged in substance
The amendments do not relax managers' liability. Using new tools such as classes or redomiciliation still requires proper approvals and records. See directors' and managers' duties.
Cross-border angle
For foreign groups, the UAE Commercial Companies Law amendments narrow the gap between onshore companies and DIFC or ADGM vehicles. Investors from the UK, Singapore or India who are used to preference shares and drag rights will find more of that toolkit available onshore. The DIFC and ADGM still offer common-law courts, established share security and familiar case law, so many groups will keep a holding company there.
Foreign companies operating in the UAE through branches should note the clarified scope: the law expressly applies to them. Check whether parent-company approvals, apostilles and translations are needed for any constitutional change.
Next steps
Read the consolidated Commercial Companies Law and the new Civil Transactions Law together, track the implementing decisions, and take the steps above in order. To review your structure or documents in light of the UAE Commercial Companies Law amendments, contact TRW & Co.
Frequently asked questions
01When did the 2025 Commercial Companies Law amendments take effect?
Federal Decree-Law No. 20 of 2025 was issued in October 2025 and came into force in late 2025 (law-firm commentaries differ on the exact day, so check the Official Gazette record). Some provisions work immediately through a company's own documents, such as drag-along, tag-along and succession clauses. Others depend on implementing decisions from the Cabinet, the Ministry of Economy and Tourism or the Capital Market Authority (formerly the Securities and Commodities Authority), so check the current status of those decisions before relying on them.
02Do existing companies have to amend their memorandum of association?
The amendments do not impose a general deadline for existing companies to update their constitutional documents. Most changes are enabling: they give companies new options such as share classes, drag and tag rights and succession mechanics. A company that wants to use those options must amend its memorandum or articles. Free zone companies operating on the mainland should check whether they now need a mainland branch or representative office under the clarified scope.
03Can an onshore LLC now issue preference shares?
In principle, yes. The amendments allow LLCs to issue classes of shares that differ in value, voting rights, redemption rights and priority in distributions, if the memorandum permits and each class is recorded in the commercial register. The Cabinet was expected to issue a decision on share classes, and registration practice may vary between licensing authorities. Design the structure now, but confirm the current requirements with the relevant authority before implementing it.
04Can a free zone company move to the mainland without liquidating?
The amendments allow a company to transfer its registration between licensing authorities, including between free zones and the mainland in either direction, while keeping its legal personality, provided both authorities permit it and the required approvals and publication are completed. Transfers involving the DIFC or ADGM are subject to additional Cabinet controls. Check the rules of both authorities and the tax consequences before planning a move.
05Do the amendments apply to DIFC and ADGM companies?
DIFC and ADGM companies remain governed by their own companies laws and regulations. The amendments do, however, confirm that companies incorporated in the financial free zones have UAE nationality, and they contemplate redomiciliation to and from those centres subject to controls set by the Cabinet with the relevant authorities. If a DIFC or ADGM company operates on the mainland, onshore licensing and branch requirements may also apply.
06What should shareholders do now?
Review the memorandum or articles and any shareholders' agreement. Consider adding drag, tag and succession terms with express pre-emption waivers; decide whether share classes would help with investors or family succession; check whether any free zone entity needs a mainland branch; and map whether redomiciliation could simplify planned restructurings. Hold implementation of anything that depends on pending implementing rules until those rules are confirmed.
Sources and official materials
- Federal Decree-Law No. 32 of 2021 on Commercial Companies — Consolidated companies law and its 2025 amendment record
- UAE Government issues Federal Decree-Law promulgating the Civil Transactions Law — Companion reform governing contracts from 1 June 2026
- Ministry of Economy and Tourism — Ministry responsible for companies and implementing decisions
- Capital Market Authority (formerly SCA) — Private placement and joint stock company rules
- ADGM Registration Authority — Financial free zone registration and transfers
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.
