Major Updates in UAE Commercial Companies Law (2025): A Complete Business Guide

One of the most transformative updates is the formal legal framework for non-profit companies.

What Has Changed?

Under the new provisions:

• Profits must be reinvested into the company’s primary purpose
• No profits can be distributed to partners or shareholders

Clear legal recognition is provided for purpose-driven and social enterprises

Why This Matters

Previously, organisations with social or charitable objectives often struggled to fit into traditional corporate structures. The new framework:

• Provides legal certainty for NGOs and social enterprises
• Encourages impact-driven business models
• Supports sustainability, education, healthcare, and community-focused initiatives

This change aligns the UAE with global trends where profit and purpose coexist within structured corporate entities.

Multiple Classes of Shares: A Major Governance Upgrade

Earlier, companies—especially LLCs—had limited flexibility in designing ownership and control structures. The updated law now allows multiple classes of shares for LLCs and Joint Stock Companies (JSCs).

Key Features

Companies can issue shares with:

• Different voting rights
• Preferential profit distribution

Special participation or exit rights

Practical Benefits for Businesses

This update is particularly valuable for:

• Startups seeking venture capital
• Founders who want to retain decision-making control
• Family businesses planning succession
• Companies onboarding strategic investors

By enabling customised share structures, businesses can raise capital without compromising governance stability.

Easier Fundraising for Private Joint Stock Companies

Fundraising has long been a challenge for growing private companies. The revised law significantly improves this process for Private Joint Stock Companies (PJSCs).

What’s New?

• PJSCs can now offer securities through private placements within the UAE
• No mandatory conversion into a public joint stock company
• Reduced regulatory and compliance burden

Why This Is Important

This change:

• Speeds up capital raising
• Preserves business confidentiality
• Reduces legal and administrative costs

For growth-stage companies, this creates a smoother path to expansion while maintaining operational control.

Clearer Rules on Share Transfers and Succession Planning

Succession planning has been a sensitive area for UAE-based companies, particularly family-owned businesses. The updated law introduces clear protections and exit mechanisms.

New Shareholder Rights Introduced

• Tag-Along Rights: Protect minority shareholders when majority owners sell their stake
• Drag-Along Rights: Allow majority shareholders to enforce a sale under defined conditions

Business Impact

These provisions:

• Reduce shareholder disputes
• Improve investor confidence
• Enable smoother exits and mergers
• Support long-term business continuity

Clear succession rules are especially valuable in inheritance scenarios, ensuring ownership transitions are legally protected and commercially fair.

Seamless Company Relocation Across the UAE

Another highly practical reform is the ability for companies to relocate across jurisdictions within the UAE.

What Is Now Allowed?

• Relocation between different emirates
• Transfer between mainland and financial free zones

Retention of the same legal identity

Why This Is a Game-Changer

Previously, relocation often meant company closure and re-registration. The new process:

• Saves time and costs
• Preserves contracts and licenses
• Reduces operational disruption

This flexibility supports businesses adapting to regulatory, operational, or market changes without losing corporate continuity.

Standardised Valuation of In-Kind Contributions

To improve transparency and protect investors, the updated law introduces clear valuation rules for non-cash contributions.

Key Requirements

• In-kind contributions must be valued by approved specialists
• Valuation reports must meet regulatory standards

Applies during incorporation and capital increases

Benefits for Businesses

• Prevents over- or under-valuation of assets
• Enhances trust among shareholders
• Strengthens financial reporting accuracy

This change is particularly relevant for startups and asset-heavy businesses contributing intellectual property, equipment, or real estate as capital.