UAE Commercial Companies Law Overhaul: Share Classes, Re-Domiciliation and New Governance Tools Now in Force

Insight Advisory — insightadvisory.ae — 22 March 2026

Background

Federal Decree-Law No. 20 of 2025, amending the UAE’s Commercial Companies Law (Federal Decree-Law No. 32 of 2021), came into force on 1 January 2026. The amendment spans 15 articles and introduces the most significant reform to UAE corporate law in years — affecting mainland LLCs, private joint stock companies (PJSCs), free zone entities operating onshore, and multinational groups structuring their UAE presence.

At a media briefing in January 2026, Minister of Economy Abdulla bin Touq Al Marri confirmed the amendments are designed to align UAE company law with international best practice, reduce compliance costs, and make the UAE a more attractive destination for investment and corporate headquarters.

Expanded Scope: Free Zones and the Mainland

One of the most consequential clarifications is that the CCL now expressly applies to branches and representative offices of free zone companies — including those in ADGM and DIFC — when those entities carry on activities in mainland UAE. This codifies what had been an ambiguous “dual licence” regime and removes uncertainty for groups operating across multiple jurisdictions. Free zone companies are also formally confirmed as UAE juridical persons for the purposes of federal law.

For the first time, mainland limited liability companies may issue multiple classes of shares with differentiated rights in voting, dividends, liquidation priority, and redemption. Previously restricted to joint stock companies, this tool is now available to all onshore LLCs. All share classes must be publicly registered to ensure transparency. Implementing Cabinet regulations are expected to define permissible categories and the conditions attached to each class. The UAE becomes one of the first countries in the Middle East to allow multi-class share structures in LLCs.

Re-Domiciliation Within the UAE

A new Article 15 (bis) allows companies to transfer their commercial registration from one UAE licensing authority to another — including from mainland to free zone, from one emirate to another, and between free zones — while preserving their legal identity, contracts, obligations, and operational history. No re-establishment or liquidation is required. This is a significant structuring tool for businesses wishing to reposition their corporate seat in line with commercial strategy or investor expectations. Implementing regulations are still pending for specific procedural steps.

Governance Continuity Rules

The amendment directly addresses governance vacuums — a practical risk where a manager resigns or a board mandate expires without a timely replacement. Under the new rules, manager resignations take effect after 30 days if no decision is made; companies must notify the relevant authority within 30 days when a manager’s term expires; a board whose term has expired may continue for up to six months; and if shareholders fail to reconstitute the board, authorities may appoint an interim board for up to one year. This reduces the risk of a company being unable to sign contracts or operate bank accounts due to an expired signatory.

Drag-Along, Tag-Along and Succession

The CCL now provides statutory recognition for drag-along and tag-along rights in LLCs and PJSCs, allowing these protections to be embedded directly in the constitutional documents rather than relying solely on private shareholders’ agreements. This increases enforceability and reduces transaction risk in M&A and private equity deals. The law also allows shareholders to include advance rules in their constitutional documents governing the transfer of shares upon the death of a shareholder, including provisions allowing the company to acquire those shares — a welcome development for family business succession planning.

Non-Profit Companies Recognised

For the first time, UAE company law formally recognises non-profit companies. These entities must reinvest all revenues to advance their stated objectives and cannot distribute profits to shareholders. Detailed governance and licensing rules will follow at Cabinet level. The provision opens a legal pathway for social enterprises, NGOs, professional bodies, and ESG-focused organisations to establish regulated onshore vehicles.

What Businesses Should Do Now

Review constitutional documents. Memoranda and articles of association should be assessed to determine whether existing arrangements should be modernised to incorporate share classes, drag-along and tag-along rights, or succession mechanisms now explicitly permitted under the CCL.

Map group structure. Companies operating across onshore and free zone entities should map their structures in light of the clarified scope rules and consider whether re-domiciliation could improve alignment with licensing needs or investor expectations.

Audit authorised signatories. The governance continuity rules underline the importance of keeping corporate registers and authority documentation current to avoid operational disruptions.

Sources

Book a free consultation

Get a clear view of the right setup, structure, and compliance steps for your case.

Speak to an expert

Want a quick estimate?

Use our tools to get a high-level idea before you commit.

Try our calculators