On 1 October 2025, the President of the United Arab Emirates signed Federal Decree-Law No. 20 of 2025, which introduces amendments to the current Federal Decree-Law No. 32 of 2021 concerning Commercial Companies. The changes affect a number of provisions governing local UAE companies, as well as matters of internal redomiciliation, including the transfer of registration between Free Zones and the UAE mainland.
- Companies Law scope clarified: applies to mainland companies, foreign firms with UAE management, and Free Zone branches doing mainland business.
- Internal redomiciliation introduced: companies may transfer registration between Emirates, Free Zones and the mainland while retaining legal personality.
- New corporate flexibility: authorises multiple share classes, drag‑along and tag‑along rights, and Articles rules for deceased shareholders' shares.
- Governance and capital rules updated: independent temporary directors, non‑monetary contribution valuation criteria, private share subscriptions, and non‑profit company recognition.
Scope of the UAE Federal Companies Law
The amendments clarify the scope of entities to which Federal Decree-Law No. 32 of 2021 (hereinafter referred to as the Companies Law) applies. These include:
- Companies established in the UAE (outside of free zones).
- Foreign companies conducting business or having a center of management in the UAE, including through a branch or representative office.
- Branches and representative offices of companies registered in UAE Free Zones, provided they conduct business on the UAE mainland (outside the Free Zone).
The Companies Law does not apply to UAE Free Zone companies on matters regulated by the rules of the respective Free Zone. However, if the Free Zone regulations permit companies registered within it to conduct business outside the Free Zone, such companies may establish a branch or representative office on the UAE mainland, which must comply with the Companies Law.
Redomiciliation within the UAE
The new Article 15 bis provides for the possibility of transferring a company’s registration within the UAE (a mechanism similar to redomiciliation from abroad). A company may transfer its place of registration:
- From one Emirate to another;
- From one Free Zone to another;
- From a Free Zone to the mainland;
- From the mainland to a Free Zone.
For example, a company may resort to internal redomiciliation if a new location or a new regulator is preferable in terms of their commercial or legal advantages over the previous ones.
A company may, by a resolution of the General Assembly or with the consent of the absolute majority of its partners, transfer its registration to another competent authority (e.g., another Emirate or Free Zone) while retaining its legal personality. The following conditions must be met for this transfer:
- The registration systems of both the current and the new competent authority permit such a transfer.
- There are no entries in the Commercial Register that would prevent the transfer of the company’s registration.
- Approval has been obtained from both the current and the new competent authority.
- (For Public Joint Stock Companies) Permission has been obtained from the Ministry of Economy or the SCA.
- The resolution to transfer the company’s registration has been published by the means prescribed by the competent authority.
If a Free Zone company transfers its registration to the UAE mainland, it must regularize its status in accordance with the Companies Law and all other requirements applicable to UAE mainland companies.
The new version of Article 76 for the first time grants companies the ability to issue different classes of shares. Share classes, if any, must be described in the company’s Memorandum of Association and may differ in:
- Value of the shares;
- Voting rights conferred;
- Conditions for share redemption;
- Rights in the distribution of dividends or the liquidation surplus;
- Other rights, privileges, or restrictions.
All classes of shares, as well as the rights, privileges, and restrictions attached to them, must be reflected in the Commercial Register.
Tag-Along and Drag-Along rights
Partners in Limited Liability Companies (LLC) or shareholders in Private Joint Stock Companies (PrJSC) now may include the following rights in the company’s Memorandum or Articles of Association (Article 14(4)):
| Right | Meaning |
|---|---|
|
Drag-Along (Right to Demand Co-Sale) |
One or more shareholders selling their shares in the company have the right to require the remaining shareholders to also sell their shares to a third party on the agreed terms. The drag-along right allows a majority shareholder to oblige minority shareholders to join the sale, thereby ensuring the complete sale of the company to a buyer. |
|
Tag-Along (Right to Join a Sale) |
A shareholder has the right to join a sale of shares carried out by another shareholder on the same terms agreed upon with the buyer. The tag-along right gives minority shareholders the right to sell their shares alongside the majority shareholder and receive fair value for them. |
Previously, such rules could only be implemented through a separate shareholders’ agreement.
It is now possible to stipulate rules in the company’s Articles of Association regarding the shares of a deceased partner or shareholder. Specifically, the remaining shareholders or the company itself may be granted a pre-emptive right to purchase such shares (“right of first refusal”) at a price agreed upon with the deceased’s heirs. In other words, if the heirs decide to sell the shares they inherited, they will be obliged to first offer them to the other shareholders or the company.
In case of disagreement, the valuation of the shares will be carried out by the competent court with the involvement of one or more experts (Article 14(4)).
Non-Monetary Capital Contributions
As before, the law permits contributions to the company’s capital to be made in monetary and/or non-monetary forms (contribution in kind) that have an assessable value.
The amendments stipulate that the relevant Ministry will develop criteria and conditions for the valuation of the contribution in kind, as well as rules for the accreditation of valuers (this does not apply to Public Joint Stock Companies) (Article 17).
Partners in an LLC are entitled to make a contribution in kind to the company’s capital. In this case, they are required to bear the cost of valuing their contributions by engaging one or more valuers. Otherwise, the valuation is considered void. Alternatively, partners may agree among themselves on the value of the contribution in kind, but this value must be approved by the competent authority (the company registry of the respective Emirate).
The competent authority has the right to challenge the valuation report and, if necessary, appoint a new valuer, also at the expense of the contributor. If it is proven that the non-monetary contribution was valued higher than its actual worth, the partner will be required to pay the difference in cash.
A provision has been added stating that Private Joint Stock Companies may offer their securities for private subscription in one of the UAE financial markets in accordance with the rules issued by the Securities and Commodities Authority (SCA). A private subscription means an invitation to acquire securities extended to a predetermined person or persons (Article 32).
Appointment of an Independent Director
Article 85(4) contains a new rule for situations where the term of office for the director (or board of directors) of an LLC has expired, and the partners are unable to appoint a new director for any reason.
In such cases, the registering authority, in cooperation with the bodies regulating the company’s activities, may appoint a director or board of directors from among the partners or other persons for a term of up to one year. This right of the registering authority, which includes the possibility of appointing a temporary independent director, allows the company to continue operating, preventing deadlock situations caused, for example, by a dispute between partners.
Non-Profit Companies
The legal definition of “company” (Article 8) has been expanded to include the possibility of establishing non-profit companies. The net profits of such companies cannot be distributed to its partners or shareholders and must be reinvested to achieve the objectives for which the company was established. The rules for the establishment and operation of non-profit companies will be adopted by a separate resolution of the UAE Cabinet.
Conclusion
The 2025 amendments increase the flexibility of UAE companies, both in terms of internal corporate relations and the option to transfer a company’s registration. Establishing a company in the UAE now offers greater freedom in determining the company’s internal structure and the rights of its partners, as well as the ability to relocate between Emirates and/or Free Zones.
