The UAE’s company law has changed significantly in the past five years: first by opening most mainland activities to full foreign ownership, then by a major 2025 update that gives companies tools familiar from international markets. If you own, run or invest in a UAE company, here is what you need to know.
The legal framework
- The Commercial Companies Law (Federal Decree-Law No. 32 of 2021) governs mainland companies. It allows 100% foreign ownership for most activities, except those classed as having strategic impact.
- Federal Decree-Law No. 20 of 2025, issued on 1 October 2025, amended that law. Its provisions are being phased in, with transitional periods that may run 12 to 24 months for some requirements.
- The Corporate Tax Law (Federal Decree-Law No. 47 of 2022) applies 9% corporate tax on taxable income above AED 375,000, for financial years starting on or after 1 June 2023.
- Cabinet Decision No. 109 of 2023 requires companies to keep and file records of their ultimate beneficial owners.
What the 2025 amendments change
- Share classes for LLCs. LLCs can now issue different classes of shares with different economic and voting rights. This makes it easier to bring in investors, reward founders or create employee equity.
- Drag-along and tag-along rights are formally recognised for LLCs and private joint stock companies, subject to pre-emption rules in LLCs.
- Re-domiciliation. Companies will be able to move between emirates, and between the mainland and free zones, keeping their legal personality, contracts and licences. This is subject to implementing regulations.
- Free zone companies operating onshore now fall expressly within the law, alongside their own free zone rules.
- Non-profit companies have a dedicated framework. They must reinvest revenue and cannot distribute profits.
- Deadlock relief. If shareholders cannot agree on board appointments, the licensing authority may appoint independent directors for up to one year.
- Succession planning. The company’s constitution can set out how a deceased shareholder’s shares are acquired and valued.
- Stronger governance. Directors must act with due care in the company’s best interests, disclose related-party transactions above set thresholds, and keep proper minutes and conflict registers. Penalties for breaches have increased.
- Remote meetings. Electronic and remote participation in shareholder meetings is expressly recognised.
Compliance obligations that apply now
- Corporate tax registration and filing with the Federal Tax Authority, including for companies that expect to pay little or no tax.
- Ultimate beneficial owner records kept up to date and filed with the registrar, including after any change in shareholding.
- Licence renewals and updates to the memorandum of association whenever partners, capital or activities change.
- Economic substance and anti-money laundering checks where your activities require them.
Action points for shareholders
- Review your memorandum of association and shareholders’ agreement against the 2025 amendments. Many older documents do not cover share classes, exits or deadlock.
- If you plan to raise investment, consider whether a new share class is better than issuing ordinary shares.
- Add drag-along, tag-along and succession clauses now, while all shareholders agree.
- Check whether your board composition and records meet the stronger governance standards before transitional periods end.
How we can help
Our business and corporate law team advises on shareholder agreements, restructurings, share issues, governance and company law compliance. Setting up a new entity? See our company establishment service. Contact us to review your company’s documents.
