Insights
UAE Commercial Companies Law: Do Your Company Documents Still Fit Your Business?
What changed in 2025, why it matters and what companies should check.
September 2026 · Federal Decree-Law No. 20 of 2025, effective 1 January 2026
Contents
- Different owners can have different rights
- A future sale can have a clearer process
- There is a clearer route when an owner dies
- Contributions of property or other assets face clearer valuation standards
- Moving or converting a company may preserve its legal identity
- Private joint stock company shares may be transferable sooner
- Management changes receive greater attention
- What should a company do now?
- UAE company documents decision checklist
A company’s memorandum and other ownership documents are often signed at the start of the business and then left untouched. Over time, the business may welcome investors, develop valuable assets, expand into another emirate or begin planning a sale. Its original documents may no longer deal clearly with those decisions.
Federal Decree-Law No. 20 of 2025 amended the UAE Commercial Companies Law, Federal Decree-Law No. 32 of 2021. The amendments give companies more flexibility, particularly in ownership rights, sales, restructuring and continuity. They do not automatically change the arrangements recorded in every company’s documents.
The useful question for an owner is: what was possible before, what is possible now, and do our documents allow us to use it?
1. Different owners can have different rights
The earlier position
For a typical limited liability company (LLC), the ownership structure offered less express flexibility to divide interests into classes with different rights. This could make it harder to record a deal in which, for example, an investor wanted a priority return while the founders wanted to retain particular decision-making rights.
What changed?
The amendments expressly allow different classes of ownership interests in LLCs. They also address multiple classes of shares in joint stock companies, subject to the relevant rules and approvals. Depending on the approved structure, classes may distinguish rights to profits, voting or the return of capital. The detailed categories and procedures are governed by the applicable regulatory framework.
The business impact
Ownership percentage no longer has to carry the entire commercial bargain. This may give founders and investors more room to agree rights that fit their respective contributions. The rights must still be clearly defined: a promise of a “preferred return” is of limited use if the documents do not explain when it is paid and what happens on a sale or liquidation.
Where to check and intervene?
Before admitting an investor or promising special rights, review the memorandum or articles, the proposed investment agreement and the ownership records together.
2. A future sale can have a clearer process
The earlier position
Owners could negotiate sale and exit rights in a shareholders’ agreement. However, the federal law did not set out the same express route now available for certain companies to place arrangements such as drag-along and tag-along rights in their constitutional documents. This made alignment between a private agreement and the registered company documents especially important.
What changed?
LLCs and private joint stock companies may include provisions in their memorandum or articles that, upon specified conditions, require certain owners to join a sale to a third party or allow them to sell alongside another owner. These are commonly called drag-along and tag-along rights. They are not automatic rights arising in every company; they require appropriate provisions and the necessary approvals.
The business impact
A buyer seeking to acquire the whole company can have a clearer path to completion, while minority owners can negotiate how they participate in a sale. The protection lies in the detail: which offer triggers the right, who receives notice, whether all owners receive equivalent terms, and what happens if part of the price is deferred.
Where to check and intervene?
Review the shareholders’ agreement and memorandum or articles before signing an investment or sale agreement.
3. There is a clearer route when an owner dies
The earlier position
Succession could leave a closely held company and the deceased owner’s heirs having to resolve how an interest would be valued and acquired. Existing documents might address some of those questions, but many contain little practical detail.
What changed?
The amendments address the disposal of an interest belonging to a deceased partner or shareholder. The Ministry explains that existing owners or the company have priority to purchase at a value agreed with the heirs. Where value cannot be agreed, the competent court may determine it with specialist assistance.
The business impact
The law provides a clearer route for resolving ownership, but agreement on timing, valuation and payment can still matter greatly to the heirs and the continuing business.
Where to check and intervene?
Founder-owned and family-owned companies should examine their succession and transfer provisions before they are needed.
4. Contributions of property or other assets face clearer valuation standards
The earlier position
The Commercial Companies Law already dealt with contributions made in assets rather than cash, including valuation requirements. The 2025 amendment should therefore not be described as introducing asset contributions for the first time.
What changed?
The amendments provide for standards and requirements for valuation through a ministerial decision, in coordination with the competent authority. Public joint stock companies remain subject to the relevant securities regulatory framework. Assets might include equipment, real estate or intellectual property.
The business impact
A company receiving an asset in exchange for an ownership interest needs confidence both in its value and in its legal ownership. For example, valuable software may have been developed by contractors, licensed to customers or pledged to a lender. Its valuation alone does not settle what rights the company actually receives.
Where to check and intervene?
Before an asset contribution is approved, verify title, restrictions, the valuation method and the transfer documents.
5. Moving or converting a company may preserve its legal identity
The earlier position
A move between jurisdictions or a change of legal form could involve significant practical uncertainty about whether a new entity was needed and what would happen to existing contracts and obligations.
What changed?
The amendments provide a route to transfer a company’s commercial registration between relevant jurisdictions within the UAE while retaining its legal personality, rights and obligations. They also facilitate conversion between legal forms under the applicable procedures. A transfer depends on matters such as compatible registration systems, the absence of legal impediments and approvals from the authorities concerned.
The business impact
A business may have more options to change its structure or location without losing its corporate history. That does not mean every licence, lease, banking arrangement or regulated approval will carry across without further action.
Where to check and intervene?
Before deciding to move, review the licences, constitutional documents, financing arrangements and important contracts.
6. Private joint stock company shares may be transferable sooner
The earlier position
The general restriction period on disposing of shares in a private joint stock company was two years.
What changed?
The amendments reduced that period to one year and allow it to be shortened or waived in specified circumstances. Ministerial Decision No. 83 of 2026 sets out particular cases, conditions and procedures for reductions and exemptions. It does not give every shareholder an unrestricted right to sell immediately.
The business impact
An earlier transfer may assist an investment, strategic partnership or planned exit. Whether a particular transaction qualifies must be checked before a completion date is promised.
Where to check and intervene?
Before agreeing the timing of a share sale, verify the company’s share class, the applicable restriction, the proposed buyer and the approvals required.
7. Management changes receive greater attention
The earlier position
The expiry of a manager’s term or a vacancy could create uncertainty about who had authority to keep an LLC operating while a replacement was appointed.
What changed?
The amendments address management continuity in specified circumstances, including a limited interim period following the expiry of a general manager’s or board of managers’ term and a process for appointing a replacement.
The business impact
The company has a clearer framework for avoiding a gap in management, but its own resolutions, registered details and signing authorities still need to be kept in order.
Where to check and intervene?
When changing managers, compare the memorandum, appointment resolutions, powers of attorney, bank mandates and commercial records.
What should a company do now?
The amendments do not mean that every company needs a full rewrite of its documents.
A focused review is more useful. Start with the next important event the business expects: investment, a sale, succession, restructuring or a management change.
Place the memorandum or articles, shareholders’ agreement and current commercial records together. Check whether they give the same answer to three questions:
- who owns the company?
- what rights does each owner have? and
- how can those rights change?
Then examine the contracts and approvals affected by the proposed transaction.
This is where legal input can be practical. Your lawyer can verify what the existing documents actually provide, distinguish rights already available from amendments that must be made, explain the relevant authority’s requirements and prepare a coordinated set of documents for implementation.
Conclusion
The 2025 amendments give UAE companies more choices as they grow and change. The earlier law and the new provisions should be read together: some familiar arrangements now have a clearer statutory route, while other areas such as different classes of LLC interests and corporate mobility, offer broader flexibility. For any individual company, the value of the reform depends on its documents. A review undertaken before an investor arrives or an exit begins gives owners time to decide what they want, record it clearly and obtain the approvals needed to make it work.
UAE company documents decision checklist
Start with the trade licence. Find the legal form and registering authority, then follow the matching route below. For each planned change, answer Yes or No and take the indicated next step.
1. Which route applies to the business
Find your licence type below, then compare the records listed for it.
- Mainland LLC or one-person LLC: Memorandum + register of partners + authority record
- Mainland joint stock company: Articles + shares register + regulatory record
- Mainland partnership: Registered partnership agreement + partners’ details
- Free zone company, including DIFC or ADGM: Articles + member or share record + relevant registrar record
- Branch: Parent company records + branch licence + manager authority
2. Gather the documents
- Current trade licence and registry extract or company profile
- Latest registered memorandum or articles and amendments
- Any partners’ or shareholders’ agreement
- Relevant partner, share or member record and beneficial ownership information
- Manager or director appointments, resolutions and signing authorities
A branch does not issue its own shares. For a free zone company, use the record required by its own registrar rather than assuming that mainland LLC terminology applies.
3. Follow the path
Complete only the decisions relevant to the company. A Yes answer means the documents appear aligned; the required authority process must still be checked.
3.1. New investor or owner
Do the documents state the proposed profit, voting and exit rights?
- Yes: Verify the class rights and approvals; complete the issue or transfer.
- No: Align the investment agreement, memorandum or articles and relevant register before signing.
3.2. Sale of an interest or the company
Are the sale route and all required consents clear?
- Yes: Follow the notice, purchase priority, restriction and registration steps.
- No: Review purchase priority and any drag or tag rights; draft the missing process and seek approvals.
3.3. Death of an owner
Is there a workable valuation and transfer process?
- Yes: Check the terms against applicable law and the heirs’ position.
- No: Set out purchase priority, valuation, payment and interim management.
3.4. Asset contributed instead of cash
Are ownership, valuation and transfer evidence complete?
- Yes: Confirm valuation and corporate approvals, then transfer the asset.
- No: Verify title and restrictions; prepare valuation, transfer and capital documents.
3.5. Move or change of legal form
Is the route available and are all consents identified?
- Yes: Coordinate authority approvals and update licences and contracts.
- No: Review regulators, lenders, landlords and key contracts before committing.
3.6. Manager or director change
Do appointment, signing powers and registry details agree?
- Yes: Keep resolutions, bank mandates and filings current.
- No: Correct authority gaps and prepare resolutions, powers and registrar updates.
4. Mark the result
- CLEAR the documents and registered details agree.
- VERIFY a document, consent, approval or current record is missing.
- AMEND the documents conflict or omit the intended arrangement.
Where Prestige can assist: verify existing records, identify the rules applicable to the entity, draft coordinated amendments and resolutions, and assist with approvals and filings.
General information as at September 2026. The 2025 federal amendments do not automatically amend each free zone’s regulations. The position depends on the legal form and registrar. The official Arabic legislative text should be consulted for interpretation.
Sources: Federal Decree-Law No. 32 of 2021 as amended; Ministry of Economy and Tourism briefing on Federal Decree-Law No. 20 of 2025; Ministerial Decision No. 83 of 2026; relevant free zone rules.
Questions about your company’s documents?
If the amendments raise questions for your company’s structure, ownership or upcoming transactions, our corporate team can help.
Email our team at client.relations@prestigeadvocates.com
Disclaimer. The information in this publication and any related materials is provided for general information only and does not constitute legal advice. It may not reflect changes in law or authority practice and does not address the circumstances of any particular person or business. Readers should obtain independent legal advice before acting on or relying on any information shared. Prestige Advocates and Legal Consultants is not responsible for any action taken, or any loss arising, from acting or relying on that information without independent legal advice. Reading or using these materials does not create a lawyer–client relationship.
