In October 2025, the UAE issued amendments to Federal Decree-Law No. (32) of 2021 on Commercial Companies Law (the CCL) under Federal Decree-Law No. (20) of 2025 (the Amendment Law). This is a major step taken by the UAE to modernise the current corporate legal framework in place in mainland/onshore UAE. These changes, effective from 1 January 2026, are designed to simplify how companies operate onshore, increase corporate flexibility, and embed governance tools that will feel familiar to businesses accustomed to operating in common law jurisdictions. If you are already operating in the UAE, or plan to establish a presence, it is important to understand what has changed and how it could affect your corporate structure, funding options, and shareholder arrangements.
Below we outline the key updates and why they matter.
Main changes
Clarification for operations from free zone areas
Pursuant to Article 3 of the Amendment Law, branches or representative offices of companies established in free zone areas (including financial free zones such as the Abu Dhabi Global Market and the Dubai International Financial Centre) that practise their activities in mainland UAE (i.e., outside the geographical scope of the free zone in which they are incorporated) will be subject to the CCL, in addition to being governed by the regulatory frameworks of the free zone in which they are incorporated.
This confirms that free zone companies are formally recognised as UAE companies (as expressly stated in Article 13(3) of the Amendment Law) and reduces ambiguity for multi-jurisdictional structures.
Non-profit companies
For the first time and pursuant to Article 8 of the Amendment Law, the CCL now formally recognises non-profit companies. These entities may pursue social, philanthropic, cultural, or developmental purposes, with any surplus reinvested solely in furtherance of their mission. While detailed licensing and governance rules are expected to follow in implementing resolutions, the door is now open for social enterprises, NGOs, and businesses with ESG or CSR mandates to establish regulated, not for profit vehicles onshore.
Multiple classes of shares for mainland limited liability companies
Following the amendments set out in Article 76 of the Amendment Law, mainland limited liability companies are now able to issue multiple classes of shares with differentiated rights, including but not limited to variations in voting, dividends, redemption, or liquidation priorities. However, all share classes must be publicly registered to increase transparency.
This amendment is a significant step forward in allowing more flexibility in capital structures that can be utilised onshore. We anticipate that further guidance will be issued under cabinet decisions to prescribe the categories and classes of shares, the conditions attached to each class, and the rules governing them.
In-kind capital contributions
Another major change under Article 78 of the Amendment Law is that shareholders in limited liability companies under the CCL now have the ability to offer shares in kind in exchange for shares in the company. In-kind contributions must be valued by one or more accredited valuers or otherwise agreed by the partners, with such value in each case to be reviewed and approved by the competent authority.
Company capital
While there is no fixed minimum share capital, Article 76 of the Amendment Law clarifies that a company must have capital sufficient to achieve its stated purpose. Capital must be divided into shares of equal value and may be paid in cash, in kind, or a combination of both, and must be fully paid on incorporation. This brings greater clarity to formation requirements while retaining flexibility.
Statutory drag-along, tag-along, and succession mechanisms
Drag along and tag along rights can now be embedded in the constitutional documents for onshore companies; previously these types of exit rights were addressed via shareholders’ agreements.
In addition, Article 14 of the Amendment Law clarifies how shares may be transferred on death at an agreed price, giving the company or existing shareholders priority to acquire the shares of a deceased shareholder.
Taken together, these provisions increase certainty and enforceability for shareholder exits and succession planning, bringing onshore practice closer to what has long been common in the financial free zones.
Public offerings and private placements
It remains the case that only public joint stock companies are permitted to make public offerings of their shares or other securities, provided that approval from the Securities and Commodities Authority (SCA) is obtained for any subscription invitation published in the UAE. However, Article 32 of the Amendment Law now allows private joint stock companies to make offerings of their shares or other securities via private placement on the UAE financial markets, subject to the conditions and controls of the SCA.
These amendments will help facilitate private joint stock companies’ ability to access capital markets.
Redomiciliation
Under Article 15 of the Amendment Law, companies may now, subject to shareholder approval and the consent of the relevant licensing authorities, transfer their legal registration and licensing between Emirates, from the mainland to free zones (and vice versa), and between free zones while retaining the same legal entity, history, and operations. This added mobility allows businesses to align their corporate seat with commercial strategy, licensing needs, or investor expectations without interrupting legal continuity.
Conclusion
The UAE continues to demonstrate that it is not just a business hub, but a jurisdiction committed to modern, investor-friendly corporate law. The Amendment Law delivers greater flexibility, certainty, and alignment with international practice. In practical terms, businesses can adopt more tailored capital structures, formalise shareholder rights in a statutory framework, capitalise non cash assets more readily, and reposition their legal registration to suit evolving commercial needs – all while benefiting from clearer rules for onshore and free zone operations and new options for capital raising.
If you have any questions regarding the Amendment Law and the CCL or their application to your business, please get in touch with your usual contact at Reed Smith or one of the authors. We would be happy to assist you in determining how these amendments will impact your business and the next steps you can take to continue future-proofing your business.
Client Alert 2026-003