Understanding UAE Companies: Key Aspects of Corporate Law

The United Arab Emirates is distinguished by modern company legislation that continues to evolve, drawing on national experience and international best practices. In this material, we outline the key elements of UAE corporate law, based on federal companies’ legislation.

Company legislation: Mainland vs. Free Zone 

In the Emirates, regulatory requirements are not uniform across all entities. UAE local companies (commonly referred to as “mainland companies”) are governed by unified federal legislation, granting them access to both international and domestic markets. The legal status, formation, governance, reporting, and liquidation of these companies are governed by Federal Decree-Law No. 32 of 2021 on Commercial Companies, which took effect on 2 January 2022 (the “Law”).

Unlike mainland entities, UAE free zone companies operate under the specific regulations of their respective jurisdictions (e.g., DMCC, JAFZA, Meydan, or RAKEZ) or under a single regulator overseeing multiple zones (such as DAFZ, DSO, or IFZA). The most distinct regulatory frameworks are found in the financial free zones, namely ADGM and DIFC. They are characterized not only by independent company regulations, but also by their own financial oversight and dispute resolution authorities.

From a jurisdictional perspective, both mainland companies and those registered in any free zone are considered UAE entities, as expressly stipulated in Article 9(3) of the Law. 

Scope of the UAE Federal Decree-Law on Commercial Companies 

The Law applies to:

• Companies incorporated in the UAE (excluding those in free zones);
• Foreign companies operating or managed within the UAE, including through branches or representative offices;
• Branches and representative offices of free zone companies operating on the UAE mainland (outside their respective free zones).

The Law does not apply to UAE free zone companies that operate under their own independent regulations. However, the requirements of the Law will apply to any branches and representative offices established by free zone companies within the UAE mainland.

Common features of companies in the UAE

Registration	Mainland companies in the UAE are registered at the Emirate level. The company acquires a legal personality as of its entry in the commercial register at the relevant Emirate’s corporate affairs authority (in Dubai, this is the Department of Economy and Tourism, DET). Registration is confirmed by a Commercial Register Certificate, which is permanent and does not require renewal.
Licensing	Licensing is a procedure distinct from registration and grants the company the right to conduct its declared business activities. This process is handled by the same registrar, following a “one-stop-shop” principle. The company is issued a Commercial License, which specifies its authorized business activities, as well as its owner, manager, and contact details. Upon expiry—typically after one year—the license must be renewed. If a company plans to operate in a specific industry (healthcare, education, transport, etc.), preliminary permits from other government agencies may be required to obtain a license.
Foreign ownership	Since 2021, 100% foreign ownership has been permitted for UAE mainland companies across most business activities. Shareholders of these entities may now be of any nationality.  This marks a departure from the previous requirement for a UAE national to hold at least a 51% stake. Currently, such restrictions are maintained only for companies operating in strategic sectors.
Registered address and physical office	A physical office and a registered UAE address are mandatory. The premises must sufficiently accommodate the company’s operations and staff. Verification of this space is required by both the licensing authority and banks through a registered lease agreement.
Redomiciliation	Foreign entities cannot currently redomicile directly to the UAE mainland. However, redomiciliation into UAE free zones is allowed, provided it is authorized by the rules of the chosen free zone and the laws of the company’s original jurisdiction.
Transfer of registration within the State	A company may transfer its registration within the UAE. This transfer is possible between different emirates, or from a free zone to the mainland, and vice versa. This option was formally introduced in Article 15 bis of the Law in 2025, but requires further detailing by a Cabinet Decision.
Financial statements and audit	Companies must maintain accounting records and prepare annual audited financial statements in compliance with International Financial Reporting Standards (IFRS). The audit must be conducted by a locally licensed auditor.
Economic Substance	Effective 1 January 2023, Economic Substance requirements and reporting obligations have been repealed for companies in the UAE.

Main forms of companies in the UAE

The Law provides for the following legal forms for mainland companies in the UAE:

• Limited Liability Company (LLC);
• Private Joint Stock Company (PrJSC);
• Public Joint Stock Company (PJSC);
• General Partnership;
• Limited Partnership.

A company of one legal form may be converted into another (e.g., an LLC into a PrJSC, or vice versa).

Limited Liability Company (LLC) 

The most popular option for company formation in Dubai and the UAE as a whole is the Limited Liability Company (LLC). Its key characteristics include:

Name	A company must have a name derived from its purpose or the names of its members, and also indicate its legal form—Limited Liability Company or LLC. If a company has a single owner, its name is followed by the words “Single Owner” (LLC-SO).
Number of partners	An LLC may have between 2 and 50 members (“partners”). The Law permits the establishment and ownership of a company by a single person (whether an individual or a legal entity).
Partners’ liability	Partners are liable for the company’s obligations only to the extent of the value of their respective shares in the capital.
Capital	An LLC must maintain capital sufficient to achieve its purposes. The Cabinet is authorized to determine the minimum capital requirements for an LLC. Capital contributions may be made in cash, in kind (non-cash), or a combination of both, and must be fully paid up at the time of the company’s incorporation. Cash contributions must be deposited into a UAE bank account opened in the name of the company. The valuation of in-kind contributions must be verified by an appraiser’s report or approved by the competent authority.
Partners’ shares	As a general rule, LLC’s capital must consist of shares of equal value carrying identical rights.  However, the 2025 amendments permit the issuance of different classes of shares (including variations in value, voting rights, and entitlements to profits and company assets, among others). The specific rules for exercising these rights will be established by a Decision of the Cabinet.
Transfer of shares	An LLC partner may transfer (sell or assign) their share to a third party, provided they notify the other partners, who hold a right of first refusal to purchase the share being alienated.
Memorandum of Association	The company’s Memorandum of Association (MoA) must be drafted in Arabic and certified by the registering authority. In practice, the MoA is issued as a bilingual (English-Arabic) document, electronically certified by the DET. The MoA outlines the company’s objectives and duration, its capital amount, and how ownership is split among members (by both value and percentage). It also specifies the manager’s name and authority, the rights of the share owners, the fiscal year, the venue for dispute resolution, and other standard provisions. Following the 2025 amendments, the MoA may also include: Tag-along and/or drag-along rights during a sale of shares; A priority right for the remaining members or the company to purchase shares from the heirs of a deceased member.
Manager	The LLC is governed by one or more managers, who may be either partners or third parties. The manager’s name is specified in the company’s business license. By default, the manager holds full authority to manage and represent the company before third parties and government authorities, and their actions are legally binding upon the company.
General meeting	The general meeting consists of all company partners and must be convened at least once a year, no later than four months after the end of the financial year.  The general meeting’s competencies include reviewing financial and audit reports, deciding on profit distribution, appointing the manager, and determining their compensation.

Private Joint-Stock Company (PrJSC)  

A Private Joint Stock Company (PrJSC) in the UAE is a significantly more complex entity. Unless otherwise stated, PrJSCs are subject to the same regulatory framework as Public Joint Stock Companies (PJSCs). Their key features include: 

• Incorporation procedures are more complex compared to those for an LLC. The founders committee of a PrJSC is required to provide a greater volume of documentation and obtain more approvals.
• Number of shareholders. At least two shareholders are required. Single-shareholder structures are only allowed if the shareholder is a legal entity.
• Share capital. The capital of a PrJSC is divided into shares, which must be fully paid up and cannot be offered for public subscription. The issued share capital of a PrJSC must be at least AED 5,000,000. This threshold may be adjusted by a decision of the Cabinet.
• Governance. Requirements have been established regarding the composition and procedures of the Board of Directors and General Meetings of Shareholders (see Ministerial Decision No. 137 of 2024). The Board of Directors may comprise between 3 and 11 members. It must consist predominantly of non-executive members, with at least one-third being independent members and at least one female member. The Chairman and the majority of Board members must be UAE nationals.
• Private subscription. The 2025 amendments allow PrJSCs to offer their shares via private placement on UAE financial markets, subject to rules approved by the Securities and Commodities Authority (SCA). In such cases, shares are offered to pre-selected persons or a restricted circle of investors.
• Share Transfer Restrictions (Lock-up). As a general rule, the transfer of ownership of PrJSC shares is permitted only after the completion of the first financial year following the company’s incorporation (and upon the issuance of the respective balance sheet and profit and loss account). This period may be modified or waived by a decision of the Minister of Economy. Share transfer restrictions do not apply to the pledging of shares, sales between existing shareholders, transfers to third parties by heirs of a deceased shareholder, or transfers from a bankrupt shareholder’s estate. Furthermore, the prohibition does not apply if the company conducts a share placement via private subscription.

Companies with special functions 

Holding companies 

An entity may operate as a pure holding company, with its operational activities carried out through its subsidiaries.

A holding company is defined as a JSC or LLC that controls subsidiaries within the UAE or abroad through the ownership of shares or interests. Such ownership must enable the holding company to control the subsidiary’s management and influence its decision-making (Article 268 of the Law). The name of such an entity must be followed by the phrase “Holding Company”.

The objects of a holding company are limited to:

1. holding shares or membership interests in joint stock companies and limited liability companies;
2. providing loans, guarantees, and financing to its subsidiaries;
3. owning movable and immovable property required for its activity;
4. managing its subsidiaries; and
5. owning industrial property rights (patents, trademarks, industrial drawings and models) and transfer rights for their use to its subsidiaries or third-party companies.

Holding companies prepare consolidated financial statements.

Non-profit companies

Typically, legal entities with non-commercial objectives (charitable, social, cultural, educational, or sporting) operate as public benefit entities, such as associations, foundations, clubs, and similar organizations.

The 2025 amendments introduce a new “hybrid” UAE entity focused on non-commercial objectives (Article 8(3) of the Law). Like a standard company, it involves an “economic project” that generates profit. However, it prohibits the distribution of such profits among partners or shareholders.

Profits from these economic projects must be reinvested into the company’s core mission. Detailed regulations for non-profit companies will follow in an upcoming Cabinet Resolution.

Transfer of company registration within the UAE 

Pursuant to the 2025 updates and the introduction of Article 15 bis, companies are now permitted to relocate their seat of incorporation between emirates or transition between mainland and/or free zones (similar to cross-border re-domiciliation).

The transfer is possible provided it is permitted by the regulations of both the current and the future registering authorities, and subject to other conditions established by law. Such internal corporate migration within the country allows the company to maintain its legal continuity without the need for liquidation or re-incorporation.

Companies moving from a free zone to the mainland must align their legal structure with the Commercial Companies Law 2021 and all applicable mainland regulations.

The re-domiciliation of foreign companies into the UAE is currently permitted only into free zones, provided that their specific regulations allow for such a transition.

Conclusion

UAE laws and free zone regulations offer the flexibility to select corporate vehicles tailored to specific business needs. The Limited Liability Company (LLC) remains the most popular choice among local entities. Its structure and governance principles are easily understood by international investors, as they largely reflect standard global practices.

However, to navigate the complexities of the local business landscape, professional advice is highly recommended. Expert consultation helps identify the most effective legal form for your UAE company, balancing operational requirements, tax implications, and administrative expenses.