UAE Introduces Key Amendments to the Commercial Companies Law: An In-Depth Overview for Businesses and Investors

The United Arab Emirates has enacted a key set of amendments to its Commercial Companies Law through a recently issued federal decree-law[WI1] [L2] , marking a significant development in the country’s corporate regulatory landscape. These reforms form part of the UAE’s ongoing efforts to modernise its legal framework, enhance investor confidence, and align corporate legislation with international best practices.

The amendments introduce greater flexibility in company structuring, expand governance mechanisms, and clarify several long-standing areas of ambiguity. Businesses operating in or entering the UAE market should take note of the key changes summarised below.

1. Enhanced Corporate Structuring Options

The updated legislation provides companies particularly limited liability companies (LLCs with a broader set of tools to structure shareholder relationships and internal governance. Key enhancements include:

i.          Multiple Classes of Shares:

LLCs may now issue different classes of shares with tailored rights relating to dividends, voting, redemption, and liquidation preferences and other privileges. This amendment brings UAE practice closer to established international norms.

ii.          Drag-Along and Tag-Along Rights:

The law now expressly recognises the inclusion of drag-along and tag-along rights within constitutional documents. This codification provides greater certainty to shareholders during exit events and mitigates disputes relating to compulsory share transfers.

iii.          Succession Planning Provisions:

Companies may incorporate clear rules governing the transfer of shares upon the death of a shareholder. This will assist in maintaining operational continuity and reducing family disputes, particularly in closely held corporate structures.

2. Introduction of a Non-Profit Company Structure

For the first time, the legal framework now recognises non-profit companies, entities that reinvest their surplus funds to achieve their stated objectives rather than distribute profits to shareholders. This change is expected to support organisations engaged in cultural, social, and developmental initiatives by offering them a formal corporate vehicle with clear regulatory standing.

3. Re-Domiciliation of Companies

One of the most consequential amendments is the introduction of a re-domiciliation mechanism, allowing companies to transfer their legal domicile:

                 i.          from a foreign jurisdiction into the UAE, or

                ii.          from the mainland to free zone jurisdiction,

Importantly, re-domiciliation does not require dissolution or the creation of a new legal entity. The company’s existing legal identity, contractual relationships, and liabilities remain intact. This provision will be of particular interest to multinational organisations seeking jurisdictional flexibility for commercial, tax, or restructuring purposes.

4. Expanded Access to Capital Markets

The amendments allow private joint stock companies to raise funds through private placements, subject to the approval and regulatory oversight of the Securities and Commodities Authority (SCA). [WI3] Previously, only public joint stock companies had access to such mechanisms. This change provides growth-stage companies with additional financing options without necessitating a full public offering.

5. Application of the Law to the Free Zone Entities

The revised law clarifies the extent to which the Commercial Companies Law applies to free zone companies and their branches, especially when they operate outside their designated zones. This clarification is expected to reduce compliance uncertainty for companies with activities spanning both mainland UAE and free zone jurisdictions .

Summary – How this law impacts your business?

Overall, the amendments to the Commercial Companies Law reflect a strategic policy direction aimed at:

1. enhancing the UAE’s competitiveness as a global business hub,
2. facilitating investment through improved shareholder protections and capital structuring tools,
3. promoting regulatory clarity, and
4. supporting the growth of sophisticated, investor-friendly corporate practices.

Companies currently operating in the UAE and those considering establishing a presence would be well advised to review the updated provisions, revisit their constitutional documents, and assess whether the newly available structuring and governance options align with their commercial objectives.

How Water & Shark Supports Your Compliance and Structuring Needs

The latest amendments aren’t just legal updates, they reshape how companies should structure, govern, and scale in the UAE. Water & Shark ensures your business doesn’t just stay compliant but strategically positioned. We help you redesign and build governance structures aligned with global best practices. Whether you're restructuring, planning succession, or assessing the impact of re-domiciliation, we structure your entity in a manner that is legally robust, tax-efficient, and fully compliant with UAE corporate tax, ESR, and UBO rules. Water & Shark helps you stay compliant with applicable laws and structure your business in a manner that is legally sound, tax-efficient, and built for long-term growth.

Frequently Asked Questions (FAQs)

Q1. Does the UAE Commercial Companies Law amendments apply to existing companies ?

Yes. Existing companies must review and, where required, amend their constitutional documents to align with the new provisions.

Q2. Can UAE LLCs now issue different share classes like international jurisdictions?

Yes. LLCs can issue multiple classes of shares with differentiated economic and voting rights, subject to documentation and approvals.

Q3. What is re-domiciliation and why is it important?

Re-domiciliation allows a company to transfer its legal domicile without dissolution, preserving contracts, assets, and liabilities.

Q4. Do these amendments apply to free zone companies?

Yes, particularly when free zone entities operate outside their zone or interact with mainland activities.

Q5. Is regulatory approval required for private placements by private joint stock companies?

Yes. Fundraising through private placements remains subject to SCA approval and regulatory oversight.