The UAE continues to develop its corporate legal framework to support investment, entrepreneurship and a more flexible business environment. One of the latest developments is Federal Decree-Law No. 20 of 2025, which introduces amendments to Federal Decree-Law No. 32 of 2021 on Commercial Companies.

The amendments address several important aspects of corporate law, including multiple classes of shares, shareholder exit rights, corporate redomiciliation, private placements, in-kind contributions, changes in legal form, free-zone structures and non-profit commercial companies.

Rather than replacing the existing UAE Commercial Companies Law framework, the amendments build upon it by providing businesses and investors with additional options for structuring their companies, raising capital and managing corporate transactions.

For businesses operating in the UAE, these changes also highlight the importance of reviewing corporate documents and ensuring that shareholder arrangements and governance structures remain aligned with the applicable legal and regulatory requirements.

1. Multiple Classes of Shares: Greater Flexibility for Investors

One of the notable developments under the amended framework is the recognition of multiple classes of shares or equity interests.

Different classes of shares may carry different rights, depending on the company's constitutional documents and applicable contractual arrangements. These rights may relate to matters such as:

• Voting rights;
• Economic rights;
• Redemption rights;
• Distribution rights; and
• Liquidation rights.

This flexibility can be particularly relevant to businesses seeking investment from strategic investors, venture capital funds and private equity investors.

For example, investors participating in the same company may have different commercial objectives. A company may therefore need to structure shareholder rights in a way that reflects different investment arrangements.

However, the rights attached to each class should be carefully documented to avoid uncertainty or disputes between shareholders.

2. Drag-Along and Tag-Along Rights

The amendments also provide statutory recognition of drag-along and tag-along rights, which are important mechanisms in shareholder transactions and mergers and acquisitions.

What is a Drag-Along Right?

A drag-along right may allow majority shareholders, subject to the applicable legal and contractual conditions, to require minority shareholders to participate in a sale of the company.

This can help facilitate a transaction where a purchaser wishes to acquire the entire company rather than only the majority shareholder's interest.

What is a Tag-Along Right?

A tag-along right can provide protection to minority shareholders by allowing them to participate in a sale by majority shareholders on the same terms.

These provisions can provide greater clarity regarding shareholder exits and may become particularly relevant when drafting:

• Shareholder agreements;
• Investment agreements;
• Share purchase agreements; and
• M&A transaction documents.

Businesses should ensure that their corporate documents clearly establish how these rights can be exercised and what procedures must be followed.

3. Corporate Redomiciliation in the UAE

Another significant development concerns corporate redomiciliation.

Corporate redomiciliation generally involves transferring a company's registration from one jurisdiction to another while preserving its legal personality, subject to the applicable requirements.

Instead of dissolving an existing company and incorporating a completely new entity, a company may, where permitted, continue as the same legal entity following the transfer.

This can potentially allow a company to maintain continuity in relation to its:

• Contracts;
• Rights;
• Obligations;
• Corporate relationships; and
• Existing business arrangements.

The availability of corporate redomiciliation can be particularly relevant to businesses that change their operational structure, investment arrangements or jurisdictional requirements during their development.

Companies considering such a restructuring should assess the applicable regulatory requirements before proceeding.

4. Changes Affecting Private Joint-Stock Companies

The amendments introduce changes concerning private joint-stock companies, including the holding period applicable to shares.

The mandatory holding period for shares in private joint-stock companies has been reduced from two years to one year, subject to the applicable framework and any further modification through ministerial decisions.

The amendments also provide greater flexibility for private joint-stock companies to issue securities through private placements in UAE financial markets, subject to the relevant regulatory requirements.

This may provide an additional capital-raising mechanism for companies that are seeking to expand but are not immediately considering a public offering.

For growing businesses, understanding the distinction between different fundraising mechanisms and the associated regulatory requirements will therefore become increasingly important.

5. In-Kind Contributions and Valuation Requirements

Corporate capital does not always consist solely of cash. Businesses may contribute assets such as:

• Real estate;
• Equipment;
• Intellectual property; and
• Other non-cash assets.

The amended framework establishes standards concerning the valuation of in-kind contributions.

Clear valuation procedures can improve transparency when assets are contributed as capital and may help reduce disagreements concerning the value attributed to non-cash contributions.

Companies making or receiving in-kind contributions should ensure that the relevant valuation and supporting documentation comply with the applicable requirements.

6. Changing a Company's Legal Form

The amended framework also provides companies with greater flexibility to change their legal form while maintaining their legal personality, subject to the applicable requirements.

This may be relevant where a business needs to restructure because of:

• New investment;
• Financing requirements;
• Business expansion;
• Changes in ownership;
• Commercial restructuring; or
• Long-term growth plans.

Maintaining legal continuity during a change of legal form can be commercially significant because businesses may need to manage existing contracts, assets, liabilities and relationships while implementing the new corporate structure.

7. Free-Zone Companies and Mainland Operations

The amendments also address the relationship between the federal corporate framework and free-zone and financial free-zone structures.

Subject to the applicable laws and regulatory requirements, free-zone companies may undertake activities in the UAE through branches or representative offices.

This may provide additional opportunities for businesses established in free zones to expand their operations and establish a presence in other parts of the UAE.

However, businesses should distinguish between:

• Free-zone licensing requirements;
• Mainland licensing requirements;
• Financial free-zone regulations; and
• Sector-specific regulatory requirements.

A corporate structure that works for one business may not necessarily be suitable for another. Companies should therefore assess the licensing and regulatory implications before expanding their activities.

8. Recognition of Non-Profit Commercial Companies

The amendments also recognise the concept of a non-profit commercial company.

Under this structure, profits are intended to be used to achieve the company's stated objectives rather than being distributed to shareholders or partners.

The detailed operation of this framework will depend on the applicable regulatory requirements and implementing provisions.

This development may be relevant to organisations seeking a formal corporate structure while pursuing objectives that are not primarily focused on distributing profits to shareholders.

9. Impact on Corporate Governance

The amendments are not limited to company formation and investment structures. They also have implications for corporate governance.

Greater flexibility in share classes, shareholder exits, restructuring and corporate mobility means that businesses need clear and effective corporate documentation.

Companies should consider reviewing their:

• Memorandum of Association;
• Articles of Association;
• Shareholder agreements;
• Share-transfer provisions;
• Voting arrangements;
• Shareholder rights;
• Exit mechanisms;
• Investment agreements; and
• Corporate restructuring documents.

Particular attention should be given to ensuring that contractual provisions do not conflict with mandatory provisions of applicable UAE law.

10. What Should UAE Businesses Do in 2026?

Businesses should consider conducting a corporate legal review in light of the amendments.

Key areas to review include:

1. Corporate constitutional documents

Review the Memorandum and Articles of Association to determine whether existing provisions remain appropriate.

2. Shareholder arrangements

Review shareholder rights, voting arrangements, transfer restrictions and exit provisions.

3. Investment structures

Consider whether multiple share classes or revised investment structures may be relevant to future fundraising.

4. M&A arrangements

Review drag-along, tag-along and other shareholder exit mechanisms.

5. Corporate restructuring

Assess whether a change in legal form or corporate redomiciliation could support the company's future business structure.

6. In-kind contributions

Ensure that non-cash contributions are properly valued and documented.

7. Free-zone and mainland structures

Review whether the existing licensing and operational structure remains appropriate for the company's activities and expansion plans.

8. Regulatory developments

Continue monitoring implementing regulations, ministerial decisions and guidance issued by the relevant UAE authorities.

11. Why Legal Documentation Matters More Than Ever

Greater corporate flexibility can provide businesses with more structural options, but it also increases the importance of careful legal drafting.

For example, shareholder agreements should clearly address matters such as:

• Who can transfer shares;
• How shares may be valued;
• What happens when a shareholder wants to exit;
• Whether other shareholders have pre-emption rights;
• How drag-along and tag-along rights operate;
• How voting rights are exercised;
• What happens in the event of a deadlock; and
• How disputes are resolved.

Clear documentation can help reduce uncertainty and provide a framework for managing future investment, restructuring and shareholder transactions.

Conclusion

The 2026 amendments to the UAE Commercial Companies Law represent an important development in the country's corporate legal framework.

The changes address a range of matters, including multiple classes of shares, drag-along and tag-along rights, corporate redomiciliation, private placements, in-kind contributions, changes in legal form, free-zone structures and non-profit commercial companies.

For UAE businesses, the significance of these reforms extends beyond company formation. The increased flexibility may influence how companies structure investments, manage shareholder relationships, raise capital and approach corporate restructuring.

At the same time, businesses should not assume that the availability of a new mechanism automatically means that it can be implemented without further regulatory requirements. The practical application of several provisions may depend on implementing regulations, ministerial decisions and the requirements of the relevant authorities.

Businesses should therefore review their existing corporate structures and legal documents and obtain appropriate legal advice where necessary to determine how the amended framework applies to their particular circumstances.