UAE updates Commercial Companies Law to boost flexibility, investment and business growth

The changes form part of a long-term strategy to build a competitive, diversified and resilient business environment capable of supporting companies of all sizes.

Abdulla bin Touq Al Marri, Minister of Economy and Tourism, said that a competitive economy, flexible legislation, effective incentives, and diversified opportunities are the cornerstones of building a robust business environment capable of attracting investment, supporting corporate growth, and ensuring effective governance that protects business interests.

He added that the establishment of comprehensive and integrated legal frameworks is key to facilitating business across a wide range of economic activities and enhancing investor confidence both locally and internationally, fostering advanced governance that supports the growth and sustainability of companies of all sizes and forms.

UAE Companies Law

Minister Al Marri said the UAE, guided by the vision of its leadership, has pursued a four-decade legislative journey to develop its Commercial Companies Law, with the aim of ensuring that legal provisions enable rather than constrain businesses and projects.

He explained that the Law has undergone a series of significant amendments, including updates to its provisions and the issuance of revised versions replacing earlier ones, establishing a flexible and contemporary legislative foundation designed to increase the number of companies in the country while continuously enhancing the legislative and business environment.

Today, the UAE is home to more than 1.4 million companies, including 250,000 established in 2025 alone, underlining the vitality and dynamism of the national business ecosystem.

Al Marri said the UAE has now entered a new phase in the development of the Law with the issuance of Federal Decree-Law No. (20) of 2025, amending certain provisions of Federal Decree-Law No. (32) of 2021 on Commercial Companies.

“Comprising 15 amended articles and one newly introduced article, these amendments represent unprecedented legislative steps at the regional level, enhancing companies’ flexibility. They enable companies to keep pace with future trends and provide innovative tools that facilitate mergers and exit processes, while unlocking diversified avenues for accessing investment and financing.”

He added that the amendments are distinguished by their responsiveness to the evolving needs of the business sector, informed by continuous assessment of ground realities, while remaining aligned with global best practices through more advanced governance, broader ownership and management options, reinforced business continuity, and facilitated company transfers and legal transformations.

Multiple share classes and new company structure

A central feature of the amendments is the introduction of multiple quota and share classes in limited liability companies, as well as public and private joint stock companies, as both a legal right and a strategic tool.

This gives founders, shareholders and partners greater flexibility in structuring ownership, profit distribution and voting, compared to the previous framework, where this right was limited to public joint stock companies by Cabinet decision.

The UAE is among the first countries in the Middle East to extend this feature to limited liability companies, while many jurisdictions restrict it to joint stock companies only.

The classification of partners’ quotas or shares into multiple classes will follow models approved by Cabinet decision and aligned with relevant international legislation.

The amendments also introduce a new legal structure in the form of the non-profit company, enabling businesses to incorporate social and value-based objectives, including corporate social responsibility initiatives, innovation-driven projects, and research and development activities.

National economic identity and free zone integration

With the aim of reinforcing national economic identity, Article 9 provides that every company established in the UAE, including those in free zones and financial free zones, shall have Emirati nationality.

According to the Minister, this strengthens the country’s economic reputation, enhances access to global markets, and builds on the UAE’s international partnerships.

The new Decree-Law also represents a significant step forward in legislative alignment between local legislation and the laws governing free zones and financial free zones, particularly in relation to company establishment, operation and transfer, as well as coordination among licensing authorities.

This integration is expected to reduce compliance and operational costs, ensure business continuity, and strengthen companies’ ability to access markets.

Al Marri said: “We will continue our efforts to implement the provisions of the new Decree-Law and enable the UAE business community to maximise the benefits and advantages it provides”.

He added that the reforms support the country’s ambition to become a global hub for business and investment and align with the objectives of the ‘We the UAE 2031’ vision.