TRW & Co · Corporate law
Joint Stock Companies in the UAE: PJSC and Private JSC
A private joint stock company UAE founders form needs at least two shareholders (or one corporate owner) and AED 5 million of fully paid capital, and cannot offer shares to the public. A PJSC needs five founders and AED 30 million and lists through the Capital Market Authority. Since late 2025, converting a PrJSC into a PJSC is simpler.
Key pointWhere the PrJSC rules are silent, the PJSC provisions apply with the Ministry in place of the capital markets regulator, so a PrJSC inherits much of public-company governance without a listing.
At a glance
AED 5 million minimum
A private joint stock company needs issued capital of at least AED 5 million, paid in full and evidenced by a bank certificate before incorporation.
Two shareholders or one
At least two shareholders are required, but a single legal entity may own all shares as a Sole Proprietorship - Private Joint Stock Company.
PJSC thresholds
A public joint stock company needs at least five founders and AED 30 million of issued capital; conversions are exempt from the founder minimum.
One-year transfer lock-in
Shares in a new PrJSC generally cannot be transferred until accounts for one financial year are published, with limited statutory exceptions.
2025 amendments
Since late 2025, private placements avoid the lock-in, conversions to PJSC are simpler and constitutions may include drag-along and tag-along rights.
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Private joint stock company UAE rules: the short answer
As of October 2026. The private joint stock company UAE law allows is a mainland company whose capital is divided into equal shares, fully paid, and never offered to the public. It needs at least two shareholders (or a single corporate shareholder), an issued capital of at least AED 5 million, a board of directors and registration of its shares with a Shares Register Secretariat. A public joint stock company (PJSC) is the listed version: at least five founders, AED 30 million of issued capital and a public subscription regulated by the Capital Market Authority.
Groups choose a private joint stock company (PrJSC) when an LLC is too limited: for example to raise money from several investors, to prepare for an IPO, to issue bonds or sukuk, or because a regulator requires a joint stock form. The trade-off is more formality, higher capital and closer oversight.
The law changed in late 2025. Federal Decree-Law No. 20 of 2025, in force since late 2025, amended the Commercial Companies Law to let joint stock companies run private placements without the statutory lock-in, simplify conversion into a PJSC, and allow drag-along and tag-along clauses in the constitution.
The legal framework
- Commercial Companies Law. Federal Decree-Law No. 32 of 2021 on Commercial Companies, as amended by Federal Decree-Law No. 20 of 2025, sets out PJSC rules and a separate title for private joint stock companies. Where the PrJSC title is silent, the PJSC provisions apply, with the Ministry replacing the capital markets regulator as the supervising authority.
- Ministry of Economy and Tourism. The Ministry of Economy and Tourism reviews PrJSC incorporation applications and issues the certificate of incorporation, in coordination with the emirate's licensing authority.
- Capital Market Authority. The Capital Market Authority (formerly the Securities and Commodities Authority) approves PJSC prospectuses, public offers, bond issues and governance rules for listed companies, and regulates the Shares Register Secretariat jointly with the Ministry.
- Exchanges. Listings take place on the Abu Dhabi Securities Exchange or the Dubai Financial Market, under their own listing rules.
- Financial free zones. The DIFC and ADGM have their own companies law, with private and public companies limited by shares. Those are not "joint stock companies" under the federal law, and the comparison below shows when they are a better fit.
Only joint stock companies may issue negotiable shares, bonds or sukuk under the Commercial Companies Law, and only a PJSC may offer securities to the public. That single rule explains why companies planning to raise from many investors, issue debt or list migrate to the joint stock form.
PrJSC, PJSC and the alternatives compared
| Feature | Mainland LLC | PrJSC | PJSC | DIFC / ADGM private company |
|---|---|---|---|---|
| Minimum members | Two, or one owner | Two, or a single corporate shareholder | Five founders (not required on conversion) | One |
| Minimum capital | No fixed federal minimum for most activities | AED 5 million, paid in full | AED 30 million issued | No general minimum outside regulated activities |
| Public offer | No | No | Yes, with CMA approval | Private company: no |
| Negotiable securities | No; interests in shares | Shares, bonds, sukuk | Shares, bonds, sukuk | Shares; debt by contract |
| Board | Managers | Board of directors | Three to eleven directors, terms up to three years | Directors under the regime's rules |
| Supervisor | Licensing authority | Ministry and licensing authority | CMA, Ministry and exchange | DIFC or ADGM registrar |
For most venture-backed businesses a DIFC or ADGM holding company is more flexible than a PrJSC. The private joint stock company UAE route is strongest where the business needs a mainland operating presence, plans a UAE listing, or must hold a mainland licence that requires the joint stock form. For comparison, see our guide to the legal forms of business in the UAE.
Forming a private joint stock company
The incorporation path runs through both the emirate's licensing authority and the Ministry. The statute sets short review periods for each stage, but completeness of documents controls the real timetable.
- Agree the founders and structure. At least two shareholders, or a single legal entity for a "Sole Proprietorship - Private Joint Stock Company". Settle share capital, board composition and any reserved matters.
- Form a founders committee. The founders appoint a committee of at least two members (the sole founder acts alone) that is fully responsible for the accuracy of the incorporation documents.
- Prepare the constitutional documents. Memorandum of association and statute, an economic feasibility study and an implementation timetable. Valuation of any in-kind contributions is needed if assets are contributed.
- Obtain initial approval. File with the competent licensing authority for initial approval, which may be appealed in court if refused.
- File with the Ministry. Submit the application with the initial approval; the Ministry and the licensing authority review it and raise comments for correction.
- Deposit capital and register shares. Deposit the full issued capital in a UAE bank and deliver the shareholder register to the Shares Register Secretariat.
- Receive the incorporation certificate and licence. The Ministry issues the certificate of incorporation; the board then registers the company in the commercial register and obtains the commercial licence.
Shares in a new PrJSC cannot generally be transferred until the balance sheet and profit and loss account for at least one financial year have been published, subject to exceptions such as transfers between shareholders and transfers on death. Build that lock-in into the investment timetable; since late 2025 it does not apply to qualifying private placements made under the capital markets regulator's conditions.
Governance and shareholder rights
Because the PJSC chapters fill the gaps, a private joint stock company UAE board is formed much like a public company board: a chairman and vice-chairman elected by the board, a fixed term of office, and limits on loans to directors and their relatives. General assemblies approve accounts, appoint auditors and pass special resolutions for constitutional changes, capital changes and conversions.
Since the 2025 amendments, a joint stock company's constitution may include drag-along and tag-along clauses, giving investors a clearer exit than before. Shareholder agreements remain essential for the matters the constitution cannot carry, such as information rights, vesting and non-compete covenants; see shareholders' agreements in the UAE. Directors should understand their liability under the law; our guide to directors' duties and personal liability explains the exposure.
Raising capital
A PrJSC can increase capital by issuing new shares to existing or new shareholders, subject to pre-emption rules and general assembly approval, and can issue bonds or sukuk, including bonds convertible into shares, by special resolution. That makes the private joint stock company UAE form useful for growth companies that have outgrown an LLC but are not ready to list.
Bond and sukuk issues need a special resolution of the general assembly and the capital markets regulator's approval, and convertible bonds can be converted into shares only where the prospectus or terms provide for it. Holders of bonds that were not issued as convertible keep the choice between accepting conversion and being repaid at nominal value.
Ongoing compliance
Once registered, a PrJSC must keep audited annual accounts, hold an annual general assembly, maintain its share register through the Shares Register Secretariat, keep beneficial ownership records current and renew its commercial licence. Changes to the board, capital or statute require filings with the Ministry and the licensing authority. Corporate tax registration and filing apply in the usual way. Our guide to annual compliance for UAE companies sets out the full calendar, and the same discipline that satisfies the regulator also makes the company far easier to take through investor due diligence or an IPO.
From PrJSC to PJSC: the IPO route
Many UAE IPOs begin with an LLC or PrJSC converting into a PJSC. The conversion is exempt from the five-founder minimum, and since late 2025 it no longer needs a fresh incorporation application or a founders committee; the company can register the conversion first and then hold a general assembly to appoint the new board, auditor and share registrar.
- The prospectus and public offer require Capital Market Authority approval.
- The founders subscribe to part of the shares and the rest is offered to the public; the Cabinet may set minimum and maximum founder percentages.
- Listing on ADX or DFM follows the exchange's rules on free float, disclosure and governance.
- After listing, the company is subject to continuous disclosure, insider trading and governance obligations.
Our guide to IPOs in the UAE and the IPOs and listings practice cover the offer process, while the 2025 Commercial Companies Law amendments are summarised separately.
Foreign shareholders and cross-border points
Foreign investors can generally hold shares in a mainland joint stock company, subject to the activity-specific rules that still restrict foreign ownership in some strategic sectors. Before committing capital, check the licensed activity against the emirate's list and any sector regulator's requirements, for example in banking, insurance, telecoms or energy. Our foreign direct investment practice tracks those restrictions.
Corporate founders must provide constitutional documents, board resolutions and powers of attorney that have been notarised and legalised or apostilled as required, with certified Arabic translations for filings. Individual founders and directors need passport copies and, for residents, Emirates ID details. Allow time for this: legalisation in the founder's home country is often the slowest part of the process.
Investment from Bangladesh, India, the UK, Singapore or China often comes through a holding company in a third jurisdiction. The private joint stock company UAE investors set up will need to record its ultimate beneficial owners, and banks will ask for the full ownership chain and source of funds. Double tax treaties between the UAE and the investor's home country affect dividend and exit planning, so tax advice in both countries should be taken before the structure is fixed.
Documents to prepare
- Memorandum of association and statute, consistent with any shareholders' agreement.
- Economic feasibility study and implementation timetable for the project.
- Founders committee appointment and delegation, if a third party will file.
- Bank certificate of the fully paid capital.
- Board member list and written confirmations that membership does not breach the law.
- Valuation of any in-kind contributions and, for Sharia-compliant companies, details of the internal Sharia control committee.
Getting these documents right the first time matters because the Ministry and the licensing authority each set short correction windows; an application left incomplete can be treated as abandoned.
Illustrative scenario
Illustrative only; generic parties. A family-owned Dubai mainland LLC in the logistics sector plans to bring in two institutional investors and to list within five years. The family wants to keep control, the investors want board seats, information rights and a guaranteed exit route.
The advisers recommend converting the LLC into a private joint stock company with issued capital above AED 5 million. The statute includes drag-along and tag-along clauses permitted since late 2025, and a shareholders' agreement covers board appointment rights and reserved matters. When the business is ready, the PrJSC converts into a PJSC and applies to the Capital Market Authority for approval of the prospectus, without having to re-incorporate.
Risks and common mistakes
Treating a PrJSC like an LLC
A private joint stock company UAE founders set up must hold general assemblies, keep its share register with the Shares Register Secretariat, appoint an auditor and follow the PJSC governance rules where the PrJSC title is silent. Founders used to informal LLC management sometimes skip these steps, which can invalidate decisions and expose directors. Build a governance calendar and company secretarial support into the plan from day one.
Underestimating the capital requirement
The AED 5 million minimum must be paid in full and evidenced by a bank certificate before incorporation. It is not a notional figure that can be called later. Groups converting an existing LLC must check whether retained earnings, shareholder loans or asset contributions can be capitalised, and whether an independent valuation is needed for any in-kind contribution.
Ignoring the transfer lock-in
The one-year restriction on share transfers in a new PrJSC can derail an investor exit or a group reorganisation if nobody checked the timetable. The Minister can shorten or extend the period within statutory limits, and private placements under the capital markets regulator's conditions are now outside it, but those routes must be planned rather than assumed.
Choosing the wrong jurisdiction
A PrJSC is not always the best vehicle. If the business does not need a mainland licence, a DIFC or ADGM company may give more flexible share classes, faster investor onboarding and familiar common-law documents. Conversely, a mainland operating business that wants an onshore UAE listing may find the PrJSC route the most direct. Decide on the exit and regulatory map first.
Checklist before you incorporate
- Confirm why a joint stock form is needed: investors, debt issuance, listing or a regulatory requirement.
- Compare the PrJSC with a DIFC or ADGM holding company and with an LLC using the 2025 share-class flexibility.
- Plan the AED 5 million paid-up capital and any in-kind valuations.
- Draft a statute and shareholders' agreement that work together, including drag-along and tag-along clauses.
- Map the transfer lock-in against investor exits and reorganisations.
- If an IPO is planned, set a conversion and prospectus timetable with the Capital Market Authority process in mind.
TRW & Co advises founders, families and investors on choosing and forming joint stock companies, conversions, governance and pre-IPO restructuring, working with locally licensed advocates where court representation is needed. For advice on a private joint stock company UAE structure, contact our Dubai team at info@trw.co or +971 58 942 1012.
Frequently asked questions
01What is the minimum capital for a private joint stock company in the UAE?
Under the Commercial Companies Law, the issued capital of a private joint stock company must be at least AED 5 million and must be paid in full. A bank certificate confirming the deposit is one of the documents needed for the certificate of incorporation. The Cabinet can change the minimum on the Minister's proposal, and companies registered before the 2021 law took effect are excluded from it. A public joint stock company needs issued capital of at least AED 30 million.
02Can one person own a private joint stock company?
Only a legal entity. The law requires at least two shareholders, but as an exception a juristic person, such as a parent company, may incorporate and own all the shares. The company then carries the words "Sole Proprietorship - Private Joint Stock Company" in its name and the owner is liable only up to the capital stated in the memorandum of association. An individual who wants to be the sole owner of a mainland company would normally use a sole-owner LLC instead.
03What is the difference between a PJSC and a PrJSC?
A PJSC offers its shares to the public and can list on a UAE exchange; it needs at least five founders, AED 30 million of issued capital and Capital Market Authority approval for its prospectus. A PrJSC cannot offer shares to the public, needs AED 5 million of fully paid capital and is supervised by the Ministry of Economy and Tourism together with the licensing authority. Both can issue negotiable shares, bonds and sukuk, and a PrJSC can later convert into a PJSC.
04Does a private joint stock company need Capital Market Authority approval?
Not for incorporation, which runs through the Ministry and the emirate's licensing authority. The Capital Market Authority becomes involved in specific situations: the Shares Register Secretariat that records PrJSC shares is regulated by the Authority with the Ministry, private placements of securities follow the Authority's conditions, and bond or sukuk issues and any conversion into a PJSC with a public offer require its approvals. Advertising securities in the UAE also needs prior approval.
05How does a private joint stock company convert into a PJSC?
The general assembly passes a special resolution to convert, and the company applies with its documents for conversion and the offer. Since the 2025 amendments, the company no longer needs a new incorporation application or a founders committee, and can register the conversion before appointing a new board, auditor and share registrar, provided a general assembly follows within the statutory period. Conversions are exempt from the five-founder minimum. The public offer itself requires a prospectus approved by the Capital Market Authority.
06Is a DIFC or ADGM company better than a PrJSC for investors?
Often, for venture-backed businesses. DIFC and ADGM companies offer flexible share classes, common-law documents familiar to international investors and their own courts. A PrJSC is better where the business needs a mainland licence that requires a joint stock form, plans an onshore UAE listing, or wants to issue bonds or sukuk onshore. Since late 2025, mainland LLCs can also issue different share classes, which narrows the gap for smaller companies.
Sources and official materials
- Federal Decree-Law No. 32 of 2021 on Commercial Companies — PJSC and PrJSC rules, capital and conversion
- Ministry of Economy and Tourism — PrJSC incorporation and company policy
- Capital Market Authority — Public offers, prospectuses and securities regulation
- ADGM Registration Authority — ADGM company alternative
- Dubai International Financial Centre — DIFC company alternative
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.
