UAE Updates Commercial Companies Law to Boost Flexibility, Investment and Business Growth

The Ministry of Economy and Tourism (MoET) recently held a media briefing to review Federal Decree-Law No. 20 of 2025, which amends certain provisions of Federal Decree-Law No. 32 of 2021 concerning Commercial Companies. The updates span 15 articles and introduce a new provision regulating the transfer of a company’s registration within the commercial register.

The briefing was attended by H.E. Abdulla bin Touq Al Marri, Minister of Economy and Tourism; H.E. Abdullah Al Saleh, Undersecretary of MoET; and senior representatives from the Securities and Commodities Authority (SCA) and local economic departments, including H.E. Waleed Al Awadhi, CEO of SCA, and H.E. Saif Ahmed Al Suwaidi, Director General of the Ajman Department of Economic Development.

Forward-Looking Vision for the UAE Business Environment

H.E. Bin Touq highlighted the UAE’s long-term vision to create a pioneering business environment for companies of all sizes, aligned with global best practices and the country’s leadership directives. He emphasised that competitive legislation and policies underpin the role of businesses in driving GDP growth and sustainable development, supporting the objectives of the We the UAE 2031 vision.

“The amendments mark a pivotal milestone, enhancing corporate flexibility, sustainability, and competitiveness at both national and regional levels,” H.E. Bin Touq said. “They facilitate access to financing, support business expansion across free zones and financial free zones, and strengthen corporate governance while safeguarding shareholders’ rights.”

Multiple Share Classes and Registration Flexibility

The new law grants limited liability companies (LLCs) and joint stock companies the right to establish multiple quotas or share classes -- a system previously limited to public joint stock companies. This makes the UAE a regional leader in allowing LLCs to issue multiple share classes, providing greater ownership flexibility and clearer shareholder regulations.

Companies can also transfer their registration between emirates, free zones, and financial free zones while maintaining their legal identity, contracts, and obligations -- eliminating the need for liquidation or re-establishment. Additionally, companies can convert between legal forms, including cooperatives, ensuring smoother market entry and operational continuity.

Strengthening Alignment Across Jurisdictions

The amendments align local legislation with free zone and financial free zone laws, improving integration between licensing authorities, reducing compliance costs, and enhancing access to markets and investments. Authorities project a 10–15 per cent increase in company registrations within the first year.

Since 2021, the UAE has attracted approximately 760,000 companies, bringing the total to over 1.4 million -- a 118.7 per cent increase. In 2025 alone, around 250,000 new companies were established, while SME ownership by UAE nationals rose by 63 per cent over five years.

Economic and Tourism Achievements

The year 2025 also saw significant economic milestones:

• 37,794 trademarks registered nationally and internationally, up 74 per cent over four years.
• 3,595 intellectual property works registered, growing 124 per cent over four years.
• Tourism GDP contribution rose to 15 per cent (Dh291 billion), up from 6 per cent in 2021.
• UAE economy growth projected at 5 per cent, driven by non-oil sectors now contributing 77.5 per cent of GDP.
  
  

Enhanced Corporate Governance and Financing Tools

The amendments provide:

• Clearer rules for multiple share classes, in-kind capital valuation, and private placements.
• Temporary management solutions for LLCs facing administrative vacancies.
• Mechanisms for “Drag Along” and “Tag Along” rights to protect shareholders during sales.
• Reduced lock-up periods for private joint stock companies, facilitating investment and capital raising.
  
  

Companies in free zones can now operate in the mainland via branches or representative offices, while all companies retain UAE nationality, reinforcing the national economic identity.

Non-Profit Commercial Companies and Social Impact

A new legal form, the Non-Profit Commercial Company, allows reinvestment of profits into social, educational, health, and R&D initiatives. The Cabinet will regulate their registration, objectives, and provisions, providing flexibility while supporting economic and social impact projects.

Conclusion: Strengthening the UAE Business Ecosystem

The amendments position the UAE as a global leader in proactive economic legislation, supporting growth, investment, and sustainability. By enhancing flexibility, corporate governance, and investor confidence, the law underpins the country’s long-term economic and social development, opening new opportunities for companies, entrepreneurs, and investors alike.

 

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