The United Arab Emirates has introduced significant amendments to its Commercial Companies Law under Federal Decree-Law No. 20 of 2025, with the new changes coming into effect from January 1, 2026. These reforms are designed to provide greater flexibility for investors, simplify business restructuring, and support the UAE’s vision of becoming a leading global destination for startups, SMEs, and modern business models.

Companies operating in the UAE — as well as businesses planning to expand into the market — now have access to more agile corporate structures and improved legal tools for investment, management, and long-term growth.

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Key Changes in the Updated Companies Law

1. More Flexible Share Structures for LLCs and Private Companies

The new law allows companies to issue multiple share classes with different rights. This includes:

•preferential rights

•varied voting powers

•different dividend entitlements

•liquidation preferences

This flexibility makes it easier to structure investor agreements, allocate founder rights, and design more efficient funding rounds.

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2. Recognised Investor Protection Tools

Companies can now formally include contractual rights such as:

•drag-along and tag-along provisions

•special voting arrangements

•convertible instruments and structured equity tools

These mechanisms bring UAE corporate practice closer to international standards and simplify deal-making, especially for startups and venture-backed companies.

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3. Company Re-Domiciliation Without Liquidation

One of the most impactful changes is the ability for companies to relocate between free zones and mainland jurisdictions — or between different authorities — without closing and re-incorporating.

This means a business can move its registration to a new jurisdiction, maintain its history, contracts, licences, and bank accounts, and continue operations without interruption.

This reform reduces administrative burden and gives companies greater mobility as they scale.

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4. Introduction of the Non-Profit Company Structure

The amended law introduces the option to establish a non-profit company, where profits are reinvested into the entity’s objectives rather than distributed to shareholders.

This creates new opportunities for organisations focused on education, health, community development, CSR, and social-impact initiatives.

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Why These Reforms Matter

The new Companies Law offers businesses:

•greater flexibility when raising capital

•more efficient investor onboarding

•smoother restructuring options

•stronger legal certainty for founders and partners

•the ability to adapt corporate structures as the business expands

For companies looking to operate or scale through the UAE, the updated framework provides a more modern and globally aligned environment for business setup and long-term growth.

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