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On 1 October 2025, Federal Decree-Law No. (20) of 2025 (the Amending Law), amending Federal Decree-Law No. (32) of 2021 on Commercial Companies (the CCL 2021) was issued.
The amendments aim to modernise the UAE's corporate law framework, enhance governance standards, offer capital flexibility, provide minority protections and increase procedural efficiency, while aligning the regime with international best practice.
Background
The UAE continues to refine its company law framework to improve ease of doing business, supporting its position as a regional commercial hub. The Amending Law addresses certain areas of the CCL through targeted reforms as more particularly set out below.
The effective date and transitional application of the amendments made by the Amending Law vary by provision, with phased implementation anticipated over the next 12 to 24 months.
Key Amendments
Scope and Application
The CCL now expressly applies to all foreign entities with a presence in the UAE and to free zone companies conducting onshore activities, while preserving their specialised regulatory regimes. This clarification enhances regulatory coherence for businesses operating across multiple UAE jurisdictions.
Corporate Governance and Board Responsibilities
The Amending Law expanded directors' duties to include acting with due care, acting in the best interests of the company and to disclose related-party transactions that fall above certain statutory thresholds. Furthermore, the Amending Law identified certain categories of companies that may now be required to appoint independent directors.
The Amending Law also introduced enhanced record-keeping obligations such as maintaining board minutes, conflicts-of-interest registers and making prescribed governance disclosures to regulators, or in public records for certain events.
Share Capital, Ownership and Investment Structuring
Limited Liability Companies ("LLCs") may now issue multiple classes of shares with distinct economic, voting and other rights, enabling venture capital and private equity-style structures. The law now formally recognises drag-along and tag-along rights in LLCs and private joint stock companies, subject to existing pre-emption rules in respect of LLCs. In addition, the Amending Law now sets out clearer standards for valuing in-kind contributions, with valuer approval coordinated by the Ministry of Economy.
The Amending Law also refines rules on share issuance, transfers, treasury shares, nominee and joint-ownership arrangements, and beneficial ownership verification, strengthening transparency and minority shareholder protections. Adjustments to minimum capital requirements for certain entity types or activities may apply, subject to transitional timelines.
Capital Markets, Corporate Actions and Restructuring
Private joint stock companies may raise capital through private placements under forthcoming Securities and Commodities Authority rules, providing a regulated alternative to public offerings. Founder lock-up requirements may be amended or waived in certain cases. Procedures for capital increases, capital reductions, mergers and restructurings have been streamlined, with clearer notice, quorum, and voting requirements and express recognition of electronic and remote participation in shareholder meetings.
The conversion of LLCs into joint stock companies has been simplified, allowing existing management to lead the process without pre-appointment of a board or auditor. Companies may also, subject to the implementing regulations, re-domicile within the UAE, including between Emirates and between onshore and free zones, while retaining legal personality, contracts and licences.
Governance Continuity and Succession
To address governance deadlocks, licensing authorities may step in to appoint independent, non-shareholder directors for up to one year where shareholders cannot agree on board appointments. LLCs and private joint stock companies may now structure succession in their constitutional documents, allowing the acquisition of shares from deceased shareholders with agreed or court-determined valuation.
Non-Profit Companies
The Amending Law establishes a statutory framework for setting up non-profit companies. Such entities will be subject to bespoke rules and requirements, including the requirement to reinvest revenues in accordance with their stated objectives and prohibition from distributing profits.
Compliance, Transparency and Reporting
The Amending Law enhances financial reporting and audit requirements for larger or cross-border groups, with alignment to international accounting standards. Penalties for non-compliance have been strengthened, particularly in relation to disclosure failures, inaccurate records and related-party transaction breaches. Corporate officers are expected to oversee compliance programs, internal controls and risk management processes.
Transitional Provisions
Transitional measures are provided to allow companies time to align with the new requirements, including grace periods for capital adjustments, board composition changes and updates to governance documentation. Companies should assess how the amendments apply to existing articles of association, shareholder agreements and governance policies.
Conclusion
The Amending Law introduces significant enhancements to the UAE's Commercial Companies Law framework, with a strong emphasis on governance, minority protection, capital flexibility and transparency. Companies should act promptly to assess the impact of the amendments, update governing documents and align internal controls and reporting practices to ensure a smooth transition and avoid penalties for non-compliance with new statutory obligations.
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.
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