TRW & Co · Corporate restructuring
Corporate Restructuring in the UAE: Mergers, Conversions and Re-domiciliation
Corporate restructuring UAE groups undertake ranges from converting an LLC to a joint stock company to moving between free zones and the mainland, merging companies and inserting holding companies. Since late 2025, companies can redomicile between licensing authorities without losing legal personality. Corporate tax relief is available, but it can be clawed back within two years.
Key pointChoose the route by what must survive, not by habit: redomiciliation now keeps the company, its contracts and often its employees intact, but it is not automatically tax-neutral, and restructuring relief is clawed back if ownership moves within two years.
At a glance
Redomiciliation now possible
Since late 2025, a company may transfer its registration between licensing authorities and keep its legal personality, if both authorities permit and approvals are obtained.
Conversions simplified
Companies can convert between legal forms, such as LLC to private joint stock company, while keeping their rights and obligations; the Capital Market Authority (formerly the SCA) is involved for joint stock forms.
Mergers by absorption
The Commercial Companies Law allows mergers by absorption and consolidation, with shareholder approval, registration, publication and a creditor objection period.
Tax relief with clawback
Qualifying group relief and business restructuring relief can defer gains, but are clawed back if assets or ownership leave the group within two years.
Onshore branch needed
A free zone company operating on the mainland must do so through a mainland branch or representative office under the clarified Commercial Companies Law.
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Corporate restructuring UAE: the short answer
As of October 2026. Corporate restructuring UAE groups undertake usually takes one of six forms: converting a company from one legal form to another; moving a company between emirates, free zones and the mainland; merging two companies; inserting a holding company above an operating business; transferring a business or assets within the group; or closing entities that are no longer needed. The right route depends on what you want to keep: the company's legal personality, its licences, contracts and employees, or its tax attributes.
The rules changed materially in late 2025. Federal Decree-Law No. 20 of 2025, in force since late 2025, amended the Commercial Companies Law to let a company transfer its registration between licensing authorities while keeping its legal personality, simplified conversions between legal forms, and required free zone companies operating onshore to do so through a mainland branch or office. Corporate tax offers relief for qualifying group transfers and business restructurings, with clawback if ownership changes within two years.
Distressed restructurings, where the company cannot pay its debts, follow the bankruptcy and financial reorganisation regime instead; see our guide to bankruptcy and restructuring in the UAE.
The legal framework
- Commercial Companies Law. Federal Decree-Law No. 32 of 2021, on the UAE Legislation portal, as amended by Federal Decree-Law No. 20 of 2025, governs mainland company forms, conversions, mergers, capital changes and dissolution. The Ministry of Economy and Tourism and each emirate's licensing authority administer it.
- Free zone regulations. Each free zone has its own companies rules on continuation, transfer in and out, and mergers.
- DIFC and ADGM. Both financial centres have common-law companies regimes with continuation, merger and court-sanctioned schemes, administered by the DIFC Registrar of Companies and the ADGM Registration Authority. Transfers between these centres and the rest of the UAE under the 2025 amendments are subject to controls set by the Cabinet with those authorities.
- Corporate tax. Federal Decree-Law No. 47 of 2022 provides qualifying group relief and business restructuring relief, with implementing decisions from the Ministry of Finance and guidance from the Federal Tax Authority.
- Merger control. An acquisition of control, including by merger, that meets the notification thresholds must be cleared by the Ministry before completion. See merger control in the UAE.
- Sector regulators. The Central Bank, the Capital Market Authority (which replaced the Securities and Commodities Authority from 1 January 2026), insurance, health and other regulators approve changes affecting licensed entities.
Corporate restructuring UAE routes compared
| Route | Keeps legal personality? | Main approvals | Typical use |
|---|---|---|---|
| Conversion of legal form | Yes | Shareholder resolution; licensing authority; CMA (formerly SCA) where a joint stock company is involved | LLC to private joint stock company before investment or listing |
| Redomiciliation between authorities | Yes | Both licensing authorities; Cabinet controls for DIFC and ADGM | Moving a company between emirates, or between a free zone and the mainland |
| Merger | The surviving or new company continues; the absorbed company ends | General assemblies; licensing authorities; creditor protections; merger control if applicable | Consolidating group companies or combining with another business |
| Holding company insertion | Operating company unchanged; new holding company created | Share transfer formalities; pre-emption waivers; regulator approvals | Preparing for investment, sale or succession |
| Business or asset transfer | No; assets move to another entity | Contract consents; employee transfers; licence changes | Carving out a division or moving trade into a new vehicle |
| Liquidation of surplus entities | No; entity is dissolved | Liquidator; creditor notice; tax and labour deregistration | Simplifying after consolidation |
How each route works
Conversion of legal form
A company can convert from one form to another, for example from an LLC to a private joint stock company, without dissolving. The 2025 amendments simplified conversions and confirmed that the company keeps its legal personality, rights and obligations. Conversions into a joint stock company bring the Capital Market Authority, which replaced the Securities and Commodities Authority from 1 January 2026, into the process and require a valuation of the company's assets. Groups usually convert ahead of a large investment round or an IPO.
Redomiciliation between emirates, free zones and the mainland
Before the late-2025 amendments, moving a business from a free zone to the mainland, or from one emirate to another, meant setting up a new company, transferring assets, contracts, employees and licences, and liquidating the old one. Under the amended law, a company may transfer its registration from one licensing authority to another, keeping its legal personality, if both authorities permit it and the required approvals and publication are completed. Transfers involving the DIFC or ADGM depend on Cabinet controls. Check the current rules of both authorities before planning a move; our note on the Commercial Companies Law amendments covers what was still pending.
Free zone companies trading onshore
The amendments also clarify that a free zone company operating on the mainland must do so through a mainland branch or representative office, which is subject to the Commercial Companies Law. For many groups, the first restructuring step is simply putting this branch in place, or deciding whether to redomicile the company to the mainland instead.
Mergers
The Commercial Companies Law allows a merger by absorption, where one company absorbs another, and a merger by consolidation, where two companies combine into a new one. The merger is approved by each company's shareholders, registered with the licensing authority and published, and creditors have a period in which to object before it takes effect. The surviving company takes over the assets and liabilities of the absorbed company by operation of the merger, which avoids assigning each contract separately, although change-of-control clauses still need review.
Holding company insertion
Founders and investors often place a holding company, frequently in the DIFC or ADGM, above an operating LLC. The shareholders transfer their LLC shares to the holding company in exchange for holding company shares. This is a share transfer, so pre-emption waivers, authentication and registration apply. See setting up a holding company in the UAE and our guide to SPVs in the UAE.
Post-investment reorganisations
Many corporate restructuring UAE projects follow a funding round rather than a crisis. Investors commonly ask for a single holding company, a clean cap table, an employee incentive pool and constitutional documents that carry their protections. Since the late-2025 amendments, an onshore LLC can create share classes and include drag-along, tag-along and succession terms in its memorandum, so some investors now accept an onshore structure that would previously have required a DIFC or ADGM holding company. Registration practice for share classes was still settling after the reform, so confirm the licensing authority's approach before relying on it.
Capital changes
Increasing or reducing capital is often part of a wider reorganisation, for example to absorb losses, return surplus cash or align capital with a new class structure. A capital change in an LLC needs a shareholder resolution with the majority required to amend the memorandum, generally three-quarters of the capital, and an amended memorandum registered with the licensing authority. Reductions require particular care because creditors can be prejudiced; follow the statutory protections and keep the audited figures that support the decision.
Tax: relief and traps
Corporate tax is the area most likely to change the economics of corporate restructuring UAE groups plan. Two reliefs matter:
- Qualifying group relief allows assets and liabilities to move between members of a qualifying group without a taxable gain or loss, if ownership and other conditions are met and an election is made.
- Business restructuring relief allows a merger, spin-off or similar transfer of a whole business or an independent part of it in exchange for shares to take place without a gain or loss for the transferor, if conditions are met.
Both reliefs can be clawed back if the assets, business or ownership interests are transferred outside the group within two years. Free zone status, tax losses and tax group membership can all be affected by a restructuring. VAT has its own rules on transfers of a business, and real estate transfers can attract land department fees. We work with registered tax agents on the tax side; see corporate tax in the UAE.
Run the tax analysis before choosing the legal route, not after. A redomiciliation that keeps legal personality is not automatically tax-neutral, and a restructuring relief claimed today can be lost if the group sells the business within two years. Map any planned exit against the two-year clawback window.
A typical restructuring process
- Set the objective. Define the end-state group chart and why: investment, sale, succession, cost, tax or regulatory reasons.
- Diligence the group. List every entity, licence, contract with change-of-control or assignment clauses, employee, lease, bank facility, security and pending dispute.
- Choose the route. Compare conversion, redomiciliation, merger, holding insertion and asset transfer against what needs to survive.
- Model tax. Confirm relief eligibility, clawback exposure, free zone status and VAT, with a registered tax agent.
- Obtain approvals. Shareholder resolutions, licensing authorities, sector regulators, merger control, lenders and key counterparties.
- Implement in sequence. Execute steps in the order that keeps licences, bank accounts and employment continuous.
- Clean up. Update registers, beneficial ownership records, tax registrations, visas and bank mandates; liquidate entities that are no longer needed.
The approvals pack
Whatever the route, licensing authorities and regulators ask for broadly the same evidence: shareholder and board resolutions, the current and proposed constitutional documents, audited accounts, a group structure chart before and after, beneficial ownership information for every level, regulator and lender consents, and, for foreign parties, notarised and legalised documents with Arabic translations. Assemble the pack once and reuse it across authorities, because inconsistencies between filings are a common cause of delay in corporate restructuring UAE work.
Illustrative scenario: after a funding round
Illustrative only; generic parties. A technology business operates through a free zone company that serves mainland customers and a Dubai mainland LLC that employs the sales team. A new investor wants a single holding company with a preferred class and wants the mainland activity regularised.
The group inserts an ADGM holding company above both entities through share-for-share transfers, with pre-emption waivers from all founders. It then compares two options for the free zone company: establishing a mainland branch, or redomiciling it to Dubai mainland and merging it with the LLC. The tax review shows that business restructuring relief would be available for the merger but that the investor's planned secondary sale in eighteen months could trigger clawback, so the group chooses the branch for now and diarises the merger review after two years. Beneficial ownership filings are updated for every entity within 15 days of each change.
Risks and common mistakes
Assuming legal personality means nothing else changes
Redomiciliation and conversion keep the company, but licences, visas, bank onboarding, VAT and corporate tax registrations, and free zone tax status may still need new applications or updates. Counterparties may treat a move as a change requiring consent. Map every registration and contract before you move.
Missing change-of-control and assignment clauses
Asset transfers require assignment of each contract, and holding company insertions can trigger change-of-control clauses in loans, leases, agency and government contracts. Lender consent is often a condition. Find these early and negotiate consents before implementation.
Employees treated as an afterthought
Moving employees between entities on the mainland usually means new contracts and work permits, and end-of-service entitlements must be dealt with or carried over expressly. Mistakes create claims and visa gaps. A merger or redomiciliation can reduce this friction because the employer may stay the same; confirm with MOHRE practice before relying on it.
Ignoring merger control on intra-group steps
Purely internal reorganisations within an existing group usually do not create a new acquisition of control, but a restructuring that brings in a new investor or combines with an outside business can. If the thresholds are met, the transaction must be notified and cleared before completion, and implementing it early can attract significant fines. Check the merger control position whenever a corporate restructuring UAE plan changes who controls a business.
Leaving old entities open
Dormant companies left after a restructuring keep accruing licence, tax and register obligations. Liquidate them properly; see closing a company in the UAE.
Cross-border angle
International groups often combine a UAE restructuring with changes abroad, such as moving a holding company from an offshore jurisdiction into the DIFC or ADGM, or flipping a UAE business under a UK or Singapore parent before a fundraise.
Each jurisdiction's tax, exit and stamp duty rules apply to its part of the chain, and home-country regulators may need to approve outward investment. For groups with links to India, Bangladesh or China, foreign exchange and outward investment rules can dictate the sequence.
We coordinate with local counsel in each country and, where court sanction or proceedings are needed in the UAE, work alongside locally licensed advocates and registered DIFC and ADGM practitioners. Our corporate restructuring practice page describes the workstreams.
Checklist
- End-state group chart and objective agreed.
- Route chosen by what must survive: legal personality, licences, contracts, employees, tax attributes.
- Tax reliefs and two-year clawback mapped against planned exits.
- Merger control, regulator, lender and counterparty approvals identified.
- Free zone entities trading onshore have a mainland branch or a plan.
- Employees, visas and end-of-service positions handled.
- Registers, beneficial ownership and tax records updated; surplus entities closed.
Corporate restructuring UAE projects reward planning and sequencing. To discuss your group structure, contact TRW & Co at info@trw.co or +971 58 942 1012.
Frequently asked questions
01Can a free zone company move to the mainland without liquidating?
Since Federal Decree-Law No. 20 of 2025 came into force in late 2025, a company may transfer its registration from one licensing authority to another, including between free zones and the mainland, while keeping its legal personality, if both authorities permit it and the required approvals and publication are completed. Transfers involving the DIFC or ADGM are subject to Cabinet controls. Check both authorities' current rules and the tax consequences first.
02How do mergers work under UAE company law?
The Commercial Companies Law allows a merger by absorption, where one company absorbs another, and by consolidation, where companies combine into a new one. Each company's shareholders approve, the merger is registered and published, and creditors have a period to object. The surviving company takes over assets and liabilities by operation of the merger. Merger control clearance is needed first if the thresholds are met.
03Can an LLC convert into a joint stock company?
Yes. A company can convert from one legal form to another without dissolving, and the 2025 amendments simplified conversions, including into joint stock companies, with the company keeping its legal personality. Conversion into a joint stock company involves the Capital Market Authority (formerly the SCA) and a valuation of assets. Groups often convert before a large funding round or an IPO.
04Is a group restructuring taxed in the UAE?
It can be. Corporate tax offers qualifying group relief for transfers within a qualifying group and business restructuring relief for mergers and transfers of a business in exchange for shares, each subject to conditions and an election. Both can be clawed back if the assets or ownership leave the group within two years. VAT and land department fees need separate analysis. Take advice from a registered tax agent.
05Do employees transfer automatically in a restructuring?
It depends on the route. Where the employer company survives, for example in a conversion or redomiciliation, employment can usually continue, subject to updating registrations. Where staff move to a different company, new contracts and work permits are generally needed, and end-of-service entitlements must be settled or carried over expressly. Confirm current MOHRE practice before implementation.
06What is the difference between a corporate restructuring and a bankruptcy restructuring?
A corporate restructuring reorganises a solvent group's structure: entities, ownership, assets or legal forms. A bankruptcy or financial reorganisation addresses a company that cannot pay its debts, under the separate insolvency regime and court supervision, often involving creditors' votes. The two can overlap where a group simplifies its structure as part of a debt restructuring.
Sources and official materials
- Federal Decree-Law No. 32 of 2021 on Commercial Companies — Conversions, mergers and the 2025 redomiciliation amendments
- Ministry of Economy and Tourism — Companies policy and merger control
- Federal Tax Authority — Qualifying group and business restructuring relief guidance
- Capital Market Authority (formerly SCA) — Joint stock company conversions and listings
- ADGM Registration Authority — Continuation and transfers into and out of ADGM
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.
