UAE Commercial Companies Law 2025 Amendments

Client Alert

Key Considerations for Swiss & European Businesses

Federal Decree-Law No. 20 of 2025, amending Federal Decree-Law No. 32 of 2021 (Commercial Companies Law), introduces targeted but meaningful updates to the UAE’s federal corporate framework. The amendments form part of the UAE’s ongoing efforts to modernise company law, enhance investor protection, and align more closely with international corporate, private equity, and M&A standards. While the core architecture of the Commercial Companies Law remains unchanged, the 2025 amendments are particularly relevant for Swiss and European corporates, family offices, and investment vehicles using the UAE as a regional or international structuring hub.

Free Zone Companies & Foreign Businesses

The Law now explicitly applies to branches and representative offices of both Free Zone and foreign companies when conducting business onshore in the UAE. The amendments expressly confirm that companies incorporated in UAE free zones possess UAE corporate nationality and clarify that the Commercial Companies Law applies to branches and representative offices of foreign and free zone entities operating onshore. This provides increased certainty for cross-jurisdictional structures, subject to applicable licensing and regulatory approvals.

Not-For-Profit Companies

The Law now formally recognises non-profit companies under the Commercial Companies Law. Such entities may generate income but must reinvest profits exclusively in furtherance of their stated objectives and may not distribute profits to shareholders. This is particularly relevant for European foundations, philanthropic initiatives, research-driven organisations, and impact-focused projects seeking a corporate vehicle in the UAE. 

Company Share Capital Structure 

In a groundbreaking move, LLCs are now permitted to issue different classes of shares with varying rights. This means an LLC’s owners can create, for example, preferred shares (with priority dividends or liquidation preference), non-voting shares, or any custom class with specific voting or economic rights, so long as it complies with forthcoming Cabinet rules and is recorded in the commercial register. Previously, all LLC shares had equal rights and such tailored equity structures were only possible by using an offshore or free zone vehicle. Subject to regulatory practice and proper constitutional drafting, companies may implement structures involving varied voting rights, dividend entitlements, liquidation preferences, and transfer restrictions, consistent with international investment practice.

Shareholder’s Rights 

The Law now expressly permits the inclusion of drag-along and tag-along clauses in the constitutional documents of LLCs.

From an investor perspective, the statutory recognition of drag-along and tag-along rights within a company’s constitutional documents represents a significant step. Previously governed mainly through shareholders’ agreements, these mechanisms now benefit from explicit legislative support, aligning UAE company law more closely with Swiss and European private equity and joint venture standards.

Corporate Re-Domiciliation 

For the first time, The Law now permits re-domiciliation, i.e. allowing a company to move its domicile (registration) from one jurisdiction to another within the UAE without losing its corporate existence. A new mechanism is included allowing for a company to transfer its commercial registration between Emirates, or between onshore and a free zone (including financial free zones), subject to conditions including shareholder approval and regulatory consents. This enhances flexibility for group reorganisations, consolidations, and strategic relocations without the need for liquidation or re-incorporation.

LLC Management & Governance Continuation

The amendments also strengthen governance continuity, introducing clearer rules on manager and director resignations, notice requirements, and interim management arrangements, reducing the risk of operational disruption in closely held and group structures. Under the prior rule, if an LLC’s board term expired and shareholders failed to appoint a new board, the existing board could continue for up to 6 months, after which the Competent Authority could intervene.

Key Takeaways

▪ Greater legal certainty for companies 

▪ Statutory support for investors 

▪ New corporate options for non-profit and impact-driven initiatives 

▪ Enhanced flexibility for restructurings and re-domiciliation 

▪ Improved governance resilience and capital structuring flexibility

Clients with existing UAE structures or considering new investments should review their constitutional documents and governance arrangements in light of the 2025 amendments.

Swiss Group View 

From a Swiss and European perspective, the 2025 amendments reinforce the UAE’s position as a mature, internationally aligned corporate jurisdiction. By enhancing investor protections, enabling corporate mobility, and supporting sophisticated capital structures, the amendments further strengthen the UAE’s role as a long-term structuring and investment platform when combined with the UAE’s tax, transparency, and substance regimes. <

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Disclaimer

This client alert is provided for general information purposes only and does not constitute legal, tax, regulatory, or investment advice. The information is based on Swiss Group’s understanding of Federal Decree-Law No. 20 of 2025 as at the date of publication and may be subject to further executive regulations, regulatory guidance, or changes in practice. Specific advice should be sought before taking or refraining from any action based on the contents of this alert.