UAE Legal Year In Review 2025: Corporate, Governance And Immigration Changes In Focus

Introduction

As 2025 draws to a close, it is fair to say this year has been a turning point for the legal and regulatory framework that governs doing business in the United Arab Emirates.

The changes have not been cosmetic. They cut across several pillars that matter deeply to companies:

• The Commercial Companies Law and the way it treats onshore and free zone entities.
• The corporate tax regime including the introduction of a 15% global minimum tax for large multinational groups.
• The growing legal weight of climate, sustainability and ESG.
• New expectations around data protection and audit quality in the financial free zones.
• And, finally, practical shifts in immigration and residence requirements for partners, investors and key employees.

This article offers an end-of-year briefing written from the perspective of a UAE corporate lawyer, but intended equally for business owners, family offices, board members, investors and the wider public. The objective is simple: to explain what changed in 2025, why it matters, and how companies should prepare for 2026.

I. Recasting the Commercial Companies Law: A More Modern Corporate Framework

1. A wider perimeter: onshore companies, free zones and foreign branches

One of the most significant developments in 2025 has been a substantial amendment to the federal Commercial Companies Law (CCL). This reform clarifies and, in practical terms, widens the law's scope of application.

In particular, the law now clearly recognizes that:

• It applies not only to companies incorporated onshore,
• But can also apply to branches and representative offices of free zone entities when they carry on activities in the mainland, and
• To certain foreign companies that maintain a presence or conduct business in the UAE.

The message for corporate groups is clear: the days of treating free zone entities and their mainland branches as if they lived in separate legal universes are over. Governance, decision-making and statutory compliance must now be planned on a group-wide basis, with sensible alignment between onshore and free zone entities.

2. Introducing non-profit companies into the corporate law

A second, and genuinely innovative, development is the introduction of non-profit companies into the framework of the CCL.

These vehicles are structured as companies, but they:

• Must reinvest any surplus to advance their stated objectives.
• Are not permitted to distribute profits to shareholders or partners.
• Operate under specific licensing and governance rules issued by the competent authorities.

Why does this matter?

• It offers family offices and large groups a robust vehicle for philanthropy, CSR and social impact projects, without having to force such activities into traditional profit-making company forms.
• It provides international donors and partners with a corporate form they understand – a company – while maintaining a non-profit purpose at its core.

For groups with serious CSR agendas or long-term social projects, 2025 is the year where those initiatives can be migrated into a dedicated, purpose-built legal structure inside the UAE.

3. Share classes, investor rights and succession planning

The 2025 amendments also pull several well-known investment tools into the heart of the statute, especially for:

• Limited liability companies (LLCs); and
• Private joint stock companies (PJSCs).

Key enhancements include:

• The ability to create different classes of shares or quotas, with tailored voting and economic rights (for example, high-vote shares, non-voting shares, or preferred shares).
• Express statutory recognition of drag-along and tag-along rights, which can be embedded in the memorandum and articles of association rather than left solely in side shareholder agreements.
• Clearer mechanisms to deal with the equity of a deceased shareholder, allowing remaining partners or the company to acquire the interest based on agreed valuation mechanisms.

In practice, this means:

• Venture capital and private equity investors can structure sophisticated rights onshore, rather than being forced into offshore SPVs solely to implement familiar drag/tag and preference structures.
• Family-owned businesses can preserve control and plan intergenerational succession more intelligently, while avoiding deadlock with heirs.

The practical task for many companies in early 2026 will be to review and modernize their memoranda, articles and shareholder agreements to take full advantage of these new tools.

4. Continuity of management and avoiding governance vacuums

The law has also moved to address a very common operational risk: the situation where a manager resigns or a board's mandate expires, but no timely replacement is appointed.

The reforms introduce, in essence:

• Clearer rules on when a manager's resignation takes effect.
• The ability, under conditions, for a board or manager whose term has expired to continue temporarily until a new appointment is made.
• Powers for the competent authority, in certain cases, to appoint temporary directors if shareholders fail to act.

From a business perspective, this reduces the risk of the company falling into a legal “limbo” where it cannot sign contracts, appear before authorities or even operate bank accounts because its authorized signatories are in a grey zone.

From a governance perspective, it also underscores that directors and managers remain responsible for decisions taken during transition periods – continuity does not mean immunity.

5. Corporate mobility inside the UAE

Finally, 2025 has consolidated a clearer framework for corporate mobility – the ability to:

• Migrate or continue companies between the mainland and free zones;
• Convert between different company forms; and
• Implement mergers and reorganizations within the UAE in a more predictable way.

This creates real strategic options for groups that may wish, for example, to:

• Move a holding or financing vehicle into a financial free zone;
• Consolidate operating entities in a particular free zone; or
• Bring a previously offshore company “home” to the UAE under a continuation regime.

II. Corporate Tax and the 15% Global Minimum: A New Transparency Standard

1. The domestic minimum top-up tax (15%)

On the tax front, 2025 is the year in which the UAE has truly entered the global minimum tax era for large multinational enterprise (MNE) groups.

In broad terms:

• Groups that exceed agreed global revenue thresholds are expected to pay an effective tax rate of at least 15%.
• If the UAE operations of such a group fall below 15%, a domestic minimum top-up tax can be imposed to close the gap.

Not all companies are impacted – the rules are aimed at large, complex groups – but the direction of travel is unmistakable:

• Corporate tax planning must now be consistent with international transparency and substance standards.
• Boards of in-scope groups need to treat tax as a governance issue, not just a numerical line item.

2. Expanded exemptions and special categories

During 2025, the Cabinet has refined the categories of entities that may be exempt from corporate tax. These can include subject to conditions:

• Certain government and government-controlled entities.
• Public benefit entities, pension funds and social security funds.
• Qualifying investment funds and, in certain narrowly defined cases, foreign entities wholly owned by exempt UAE people where their income is effectively linked to the exempt activity.

For groups that sit at the intersection of public and private capital – for example, where sovereign wealth funds, state-owned entities or public benefit institutions hold stakes – the challenge is to:

• Map the group;
• Understand which entities fall into which category; and
• Align legal structures and documentation with the intended tax treatment.

3. Unincorporated partnerships and joint ventures

2025 has also brought greater clarity to the treatment of unincorporated partnerships and joint ventures for tax purposes.

Depending on how they are structured and operated, these arrangements may be treated as:

• Transparent – where tax is levied at the level of the partners; or
• Separate taxable persons – where the partnership itself must register, file returns and pay tax.

The implications for infrastructure projects, real estate developments and professional partnerships are significant. Many legacy joint venture arrangements will need to be revisited with both legal and tax lenses to confirm whether their treatment aligns with the law as it stands after 2025.

4. A more rational administrative penalty regime

Finally, the corporate tax framework has been complemented by an updated system of administrative penalties. The policy goals here are to:

• Avoid excessively punitive fines for minor or inadvertent administrative errors.
• Introduce a clearer, time-based approach to late payment penalties.
• Encourage voluntary disclosure and early correction of mistakes.

For companies, this should be read as an invitation to:

• Build internal tax governance (policies, processes, controls).
• Move away from a reactive stance towards a proactive, systematic approach to compliance.

III. Climate, Sustainability and ESG: From Vision to Legal Expectation

The UAE's net-zero ambitions and its role as a regional and global climate player have started to crystallize into binding legal frameworks.

The federal Climate Law, which became effective during 2025, creates:

• A national system for managing greenhouse gas emissions and climate adaptation.
• Powers for authorities to require certain industries and projects to measure, record and report emissions.
• A platform for future development of carbon markets and credit trading.

While the most immediate impact is on high-emission sectors such as energy, heavy industry and large-scale transport, the direction is clear for all companies:

• Climate risk and sustainability are becoming board-level topics, not just CSR talking points.
• Over time, climate and ESG disclosures will be expected by lenders, investors and regulators alongside financial statements.

Forward-looking businesses are already:

• Appointing internal sustainability leads or committees.
• Gathering data on energy usage and emissions.
• Incorporating climate-related risks into enterprise risk management and board reporting.

IV. Financial Free Zones: DIFC and ADGM Raise the Governance Bar

1. DIFC: Data protection as a central governance risk

In 2025, the Dubai International Financial Centre (DIFC) introduced important amendments to its Data Protection Law. These changes can be summarized under three main themes:

1. Broader territorial reach
   The law can now, in defined circumstances, apply to entities outside the DIFC that target or process personal data of individuals within the Centre, if they do so through stable arrangements.
2. Stronger enforcement and private claims
   Data subjects enjoy enhanced rights, including the ability to bring claims directly before the DIFC Courts for damages suffered as a result of breaches of their data protection rights.
3. Higher compliance expectations
   Controllers and processors must be more rigorous in: (1) Conducting data protection impact assessments, (2) Appointing data protection officers where required, and (2) Notifying data breaches in a timely and transparent manner.

For financial institutions, fintech firms, professional services providers and any business that processes DIFC data, these changes transform data protection from a back-office issue into a core governance risk with real regulatory and civil liability exposure.

2. ADGM: Auditors and audit quality under closer scrutiny

In Abu Dhabi Global Market (ADGM), 2025 saw the enactment of a dedicated set of Auditors Rules. These rules establish:

• Official registers for audit firms and audit principals.
• Fit and proper criteria, continuing obligations and reporting duties for registered auditors.
• Strong powers for the Registrar to suspend or revoke registrations where standards are not met.

For companies incorporated in ADGM, the message is that:

• The quality and independence of the audit function is now subject to closer regulatory oversight.
• Audit committees and boards must take their role in selecting, overseeing and evaluating auditors more seriously.
• The external audit is a governance tool, not a mere formality.

V. Immigration and Residence: When Visas Become Part of Corporate Governance

Although immigration and residence rules are not traditionally classified as “corporate law”, in today's UAE they have become deeply intertwined with how business's structure and manage their affairs, particularly in relation to partners, investors and senior employees.

1. Bank balance requirements for partner and investor visas

In practice, 2025 has made it clear that:

• Renewing a partner or investor residence visa typically requires providing a six-month bank statement, and
• Demonstrating a minimum balance over that period, aligned with a threshold (often in the tens of thousands of dirhams, or linked to the company's registered capital).

The policy rationale is simple: investor and partner visas should be backed by real financial substance, not nominal shareholdings.

For companies and family businesses, this means that:

• “Name-only” partners and symbolic shareholdings are increasingly difficult to sustain.
• Financial planning for partners must include maintaining the required balances well in advance of renewal dates.

2. Proof of real residence: tenancy and utility documentation

Another important trend that has been operationalized during 2025 and will become more prominent from 2026 is the expectation that partners and investors demonstrate actual residence in the UAE when applying for or renewing visas.

In practical terms, this often means providing:

• A valid, registered tenancy contract (for example, through Ejari in Dubai).
• A recent electricity and water bill corresponds to that address.

For many businesses, this has several consequences:

• It is no longer realistic to maintain investor visas for individuals who have no genuine residential footprint in the country.
• HR and PRO teams need to verify housing documentation as part of the visa file, not treat it as a last-minute add-on.

3. Automatic traffic fine collection during visa processing

In addition, systems in Dubai have been increasingly integrated so that outstanding traffic fines linked to an individual are automatically collected when processing:

• Residence renewals,
• Cancellations, or
• Other immigration transactions.

For employers, especially those that provide company vehicles, this creates a new operational risk:

• Unpaid or ignored fines can delay visa processes at critical times.
• Internal policies must clarify whether fines are borne by the employee or the company, and how they are to be settled.
• Traffic fine checks should become a routine part of the visa renewal checklist.

4. Immigration as part of the compliance framework

Taken together, these changes mean that immigration is no longer a purely administrative function left to PROs and service centers. It has become:

• A compliance and risk management issue, with financial, operational and reputational dimensions.
• A topic where HR, finance and legal must work together to ensure that the company can attract and retain key individuals without surprises during renewal cycles.

VI. A Governance Roadmap for 2026

Looking ahead, companies that wish to be well positioned for 2026 and beyond should consider the following practical roadmap:

1. Update constitutional documents by modernizing memoranda and articles to include appropriate share classes, drag and tag rights, succession mechanisms, and reflecting the new rules on continuity of management and board mandates.
2. Reassess group structure by mapping all onshore and free zone entities and branches, and evaluating whether certain holdings or operations would be better positioned onshore, in a financial free zone, or in another free zone, using migration or conversion tools where appropriate.
3. Build a robust corporate tax governance framework by identifying which entities are subject to UAE corporate tax and which might fall within the 15% minimum. Formalize tax roles, policies, and internal controls, and prepare for the new penalty regime by ensuring timely, accurate filings and thorough documentation.
4. Integrate climate and ESG into board agendas  by treating climate risk and sustainability as core topics for the board and relevant committees. Begin collecting and analyzing environmental data where it is meaningful to do so to support informed decision-making.
5. Elevate data protection and cybersecurity by aligning policies and contracts with the enhanced requirements in the DIFC and broader international expectations. Recognize that data protection is now both a legal and reputational risk, not merely a technical one.
6. Align immigration practice with corporate governance by adopting clear internal policies on partner and investor visas, including bank balance expectations and residency documentation. Incorporate housing and traffic fine checks into standard HR and PRO procedures.

Conclusion

The story of 2025 in the UAE is not simply about “more regulation”. It is about a business environment that is maturing, internationalizing and integrating.

• The Commercial Companies Law has become more flexible and closer to the best global practice.
• The corporate tax system has become more sophisticated and aligned with international transparency norms.
• Climate, data protection and immigration have moved from the margins to the center of corporate governance.

For business owners, family offices and investors, this brings both challenges and opportunities. The challenge lies in keeping pace with the evolving rules and embedding compliance into the DNA of the organization. The opportunity lies in operating in a jurisdiction that increasingly speaks the same language as global capital, institutional investors and international partners.

For lawyers and legal advisers, 2025 confirms that our role is no longer limited to incorporating companies or drafting contracts. We are now expected to help clients design integrated governance frameworks that connect corporate law, tax, regulation, sustainability, data and immigration into a coherent, forward-looking structure that allows businesses to grow with confidence in a fast-changing world.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.