The UAE Commercial Law is officially opening more doors and becoming more flexible, investor-friendly and modern, within the approval of the Federal Decree-Law No. 20 of 2025 that amendments Federal Decree-Law No. 32 of 2021. The new regime introduces significant changes in UAE commercial law, it broadens its reach, clarifies the interaction with free-zone regimes, introduces the non-profit company form, multiple share classes for Limited Liability Companies (L.L.C.), modernises capital rules and facilitates the restructuring of operations between mainland and free‑zone regimes.
The most important changes come with the following:
1. INCREASED JURISDICTION
One of the key changes is regarding jurisdiction and free‑zone alignment. Article 3 (3) of Commercial Companies Law (C.C.L.) as amended, clarifies that the C.C.L. applies to entities operating in the UAE, including foreign and free‑zone companies that step beyond their zone and article 9 (3) confirms that companies established in the UAE, whether onshore, in free zones or in financial free zones, are treated as UAE juridical persons for nationality purposes. At the same time, free‑zone entities remain primarily governed by their own regimes, but when they operate outside their zones the amended law gives a clearer onshore anchor, reducing the previous grey areas around “off‑zone” activity and dual compliance.
2. SILENT INTRODUCTION OF NON-PROFIT COMPANY
The non-profit form of company is introduced as a exception within the definition of the company, it is a very subtle introduction, which states that company will be considered non-profit when it’s profits are not distributed to shareholders but are reinvested in the company’s objectives, providing a proper corporate home for social, educational and development projects that previously had to improvise with standard LLCs or foundations. The purposes and regulating provisions and forms of such companies are yet to be clarified within a different legislative act.
3. COMMON LAW INSTRUMENTS INSSERATED
On internal corporate mechanics, the reforms lean heavily into modern, common‑law‑style shareholder rights and transfer mechanisms. The law integrates within the constitutional corporate documents drag-along, tag-along rights and a mechanism for dealing with deceased partners’ shares for LLC’s and Private Joint Stock Companies.
The mechanism is intended to keep ownership within the existing circle, by giving the remaining partners/shareholders/the company itself, a right of first refusal to acquire the deceased’s shares from the heirs at an agreed price. In case the parties cannot agree on a price the competent court may determine the value of the share or interest by appointing one or more experts to carry out the valuation.
The codification of these instruments is a positive and modern step in meeting the expectations of international investor, especially in private equity and venture capital agreements.
4. TRASFER OF COMMERCIAL REGISTRATION
An important amendment appears in art. 15bis, a completely new article that introduces a mechanism allowing a UAE company to move from one licensing/registration authority to another without losing its legal identity. The company may decide on the transfer by a “special decision of the General Assembly, or with the approval of an absolute majority of the partners”, and only within respect the following cumulative conditions:
a) Both commercial register system allows such transfer;
b) There is no annotation on the company that will block such transfer;
c) Approval from both competent authorities;
d) For Joint stocks companies, the approval Ministry or the Securities and Commodities Authority it is also required;
e) Publication of the decision in the in the Commercial Register.
The transfer is also permitted between free zones and the mainland, and vice versa, subject to the same cumulative conditions. When moving from a free zone to a competent authority, the company must and bring itself into full compliance with the Commercial Companies Law and implementing regulations.
For companies moving between a financial free zone and the rest of the State, the Cabinet will issue detailed controls and conditions.
5. MULTIPLE SHARES CLASSES
In parallel, the law opens the door for multiple share classes in LLCs, a change that significantly increases the flexibility of the UAE’s most used corporate vehicle. Amended art. 76 (4) of C.C.L. now states that partners will be able to classify their shares “into different categories in terms of value, voting rights, redemption rights, priority in the distribution of profits or liquidation, or other rights, privileges, or restrictions”
Considering the way the law introduces the multi-class shares, more exactly as an exception to the general rule, this instrument will only become operational once the Cabinet issues implementing resolutions specifying the limited categories and conditions under which such shares may be used. As an exception, the availability of multi‑class shares will necessarily remain confined to those expressly designated categories and may not be deployed more broadly. Nonetheless, the policy trajectory clearly points toward aligning C.C.L. capital structures in the UAE with prevailing international practice.
6. TIGHTENING THE RULES FOR IN-KIND CONTRIBUTION
Article 78 of C.C.L. now permits partners to contractually agree on the value of such in-kind contributions, only if such agreed value has been approved by the competent authority, which adds a regulatory check and can prevent inflated or artificial valuations. The valuation will be recorded in the MOA, and the contributing party will be liable towards third parties for the correctness of stated value of the in‑kind contribution, which turns mis-valuation risk from a purely internal matter to one that can ground third‑party claims.
To ensure that the stated share capital corresponds to reality and to protect other partners and creditors against capital dilution or fictitious capital, the article also introduces a sanction in case an in‑kind contribution is overvalued. More precisely, the contributing party will have to pay the difference in cash to the company.
7. MANAGEMENT CONTINUITY – HOLDOVER PERIOD
The provisions of article 85(4) of C.C.L. introduce a new modification establishing a formal “holdover period” and a contingency appointment mechanism to avoid a leadership gap in C.C.L. According to this clause, if the term of the board of managers expires and a new board has not yet been appointed, the existing board will continue managing the company, but for no longer than six months. This modification ensures that day-to-day operations are not paralysed while partners decide on the new appointments.
The provisions also insert a clear duty on the general assembly to reconstitute the new board of managers by the end of the six months period. In case that the general assembly fails in its duty, at the end of the six months, the competent authority may appoint a single manager or a board of managers, either from among the company’s partners or from other persons, not specifying any conditions for the term “others”, so it is inferred that any person may be appointed at the authority discretion. The appointment may last one year during which the general assembly must elect a new board accordingly.
This clause is clearly intended to prompt partners to move beyond passivity and to secure uninterrupted leadership of the company. In simple terms, it encourages timely decisions on the board and makes sure there is always someone in charge.
In conclusion, the amendments to C.C.L. constitute a substantial change and a refreshing development, reflecting a modern vision for commercial business in the UAE.
