UAE Commercial Companies Law — Federal Decree-Law No. 32 of 2021

Home
Laws
UAE Commercial Companies Law — Federal Decree-Law No. 32 of 2021
UAE Commercial Companies Law
FRMFRM Share

 

Overview

The Commercial Companies Law (CCL) is the principal legislation governing the formation, structure, governance, and dissolution of companies operating in the UAE mainland. When first issued in 2021, the CCL represented the most substantial reform of the UAE’s corporate law regime in decades — most notably removing the long-standing requirement for UAE national majority ownership in most commercial activities, allowing up to 100% foreign ownership.

Four years later, Federal Decree-Law No. 20 of 2025 introduced targeted amendments across 15 articles, plus a new article on corporate redomiciliation. According to the Ministry of Economy and Tourism, these reforms are designed to enhance governance standards, provide greater capital flexibility, strengthen minority shareholder protections, and align the UAE’s corporate framework more closely with international best practice.

Key Provisions Relating to Company Formation and Ownership

1. Foreign Ownership

Since the CCL’s original 2021 reform, up to 100% foreign ownership is permitted for the vast majority of commercial and industrial activities on the UAE mainland, removing the previous requirement for a UAE national to hold at least 51% of company shares in most sectors.

2. Jurisdictional Scope (2025 Amendment)

The 2025 Amendment expressly clarifies that the CCL applies to branches or representative offices of free zone companies established on mainland UAE (i.e., operating outside their free zone). The law now expressly extends to all foreign entities with a presence in the UAE and to free zone companies conducting onshore activities, closing a previous gap in jurisdictional coverage.

3. UAE Nationality of Registered Entities

Under the 2025 Amendment, entities established in the UAE — including free zone companies — are expressly recognised as holding UAE nationality for the purposes of the CCL.

4. Company Types

The CCL recognises several company structures, most commonly:

  • Limited Liability Company (LLC) — the most widely used structure for small and medium-sized businesses, requiring at least one shareholder (and no statutory maximum in most cases).
  • Private Joint Stock Company (PrJSC) — suited to larger private enterprises with more complex shareholding structures.
  • Public Joint Stock Company (PJSC) — required for companies seeking to list shares publicly, and mandatory for entities conducting banking or insurance activities, unless otherwise permitted by sector-specific legislation.

5. Non-Profit Companies (2025 Amendment)

The 2025 Amendment establishes, for the first time, a statutory framework for setting up non-profit companies under the CCL — introducing common law principles and structural flexibility not previously available under the original 2021 law.

Key Provisions Relating to Businesses and Investors

1. Corporate Mobility and Redomiciliation (2025 Amendment)

One of the most significant structural reforms introduced by the 2025 Amendment is a new legal mechanism for redomiciliation — allowing a company to transfer its registration between competent authorities, and between mainland and free zone jurisdictions, without the need for liquidation or re-incorporation. Upon migration, the company’s contracts, rights, obligations, and corporate history remain unaffected, safeguarding the position of shareholders and creditors while enabling regulatory optimisation and group restructuring.

2. Private Placements (2025 Amendment)

The 2025 Amendment substantially revised Article 32. Previously, this article focused narrowly on prohibiting entities other than a public joint stock company from advertising an invitation to subscribe to public securities without SCA approval, without addressing private placements. The amended article now expressly codifies private placements — offers made to pre-selected or sophisticated investors — giving private companies a broader financing toolkit for pre-IPO financings, private equity transactions, and strategic investments without the burdens of a public offering. Private joint stock companies may now offer securities via private placement with SCA approval.

3. Shareholder Rights and Minority Protections

The 2025 Amendment introduces enhanced governance and minority shareholder protections, including clearer mechanisms around capital structuring and exit rights, addressing gaps that previously left minority shareholders with limited statutory recourse in certain scenarios.

4. Capital Structuring Flexibility

The Amendment aligns shareholding structures and constitutional documentation requirements more closely with practical business needs and existing exit mechanisms, giving companies greater flexibility in how they structure capital and ownership arrangements.

5. Corporate Tax Interlinkage

Commercial companies operating in the UAE must also account for the UAE’s corporate tax regime under Federal Decree-Law No. 47 of 2022 (as amended by Federal Decree-Law No. 60 of 2023 and No. 40 of 2024), including the Domestic Minimum Top-up Tax of 15% applicable to in-scope multinational enterprises for financial years starting on or after 1 January 2025. Companies restructuring under the new CCL redomiciliation mechanism should assess the corporate tax implications of any change in registration or jurisdiction.

6. Governance and Compliance Obligations

Companies should treat the CCL as, in practical terms, a “living law” — subject to frequent Cabinet Resolutions and Ministerial Decisions that update permissible business activities, reporting templates, and compliance deadlines. Businesses are generally advised to:

  • Review and, where necessary, amend articles of association, board charters, and share transfer protocols to reflect the new flexibilities introduced in 2025.
  • Cross-reference permitted business activities and ownership rules against the latest lists published by the relevant Department of Economic Development.
  • Maintain up-to-date Ultimate Beneficial Owner (UBO) registers and ensure timely corporate tax filings.

Frequently Asked Questions

When did the 2025 amendments to the Commercial Companies Law take effect? Federal Decree-Law No. 20 of 2025 was issued on 1 October 2025 and took effect the day following its publication in the Official Gazette, which occurred on 14 October 2025 (with certain provisions subject to phased implementation over the following 12 to 24 months).

Can I now redomicile my company between a free zone and the mainland without liquidating it? Yes. The 2025 Amendment introduced a new statutory mechanism allowing companies to transfer their registration between competent authorities — including between mainland and free zone jurisdictions — without the need for liquidation or re-incorporation, while preserving existing contracts, rights, and obligations.

Does the Commercial Companies Law apply to free zone companies? It now applies more broadly than before. Following the 2025 Amendment, the CCL expressly applies to branches or representative offices of free zone companies operating on the UAE mainland, and to free zone companies conducting onshore activities.

Can a private company now raise capital through a private placement? Yes. The amended Article 32 expressly codifies private placements for the first time, allowing private joint stock companies to offer securities to pre-selected or sophisticated investors, subject to SCA approval — without the requirements associated with a full public offering.

Is 100% foreign ownership still available? Yes. The removal of the UAE national majority ownership requirement for most commercial and industrial activities, introduced under the original 2021 law, remains a core feature of the CCL.

Are non-profit companies now recognised under UAE commercial law? Yes. The 2025 Amendment establishes, for the first time, a dedicated statutory framework for setting up non-profit companies under the CCL.

When Do You Need a Specialist Commercial Companies Lawyer?

  • When forming a new company and deciding on the most appropriate legal structure (LLC, PrJSC, PJSC, or non-profit company) for your business objectives.
  • When considering redomiciliation of your company between a free zone and the mainland, or between different competent authorities, under the new 2025 mechanism.
  • When structuring a private placement or other capital-raising activity that requires SCA approval.
  • When reviewing or amending your company’s articles of association, board charters, or share transfer protocols to reflect the 2025 amendments.
  • When addressing a shareholder dispute, minority shareholder rights issue, or exit mechanism under your company’s constitutional documents.
  • When assessing the impact of the CCL’s expanded jurisdictional scope on your free zone company’s onshore branch or representative office activities.

Related Services from Our Firm

🔗 Corporate Law – Our Corporate Law Services 🔗 Mergers & Acquisitions (M&A) – Our M&A Services

References

Content last updated: July 2026. This content is provided for general informational purposes only and does not replace specialist legal advice.

Share:
What Makes a Will Legally Valid in UAE
Prev post
What Makes a Will Legally Valid in UAE?
August 9, 2026
Family Companies Law
Next post
UAE Family Companies Law — Federal Decree-Law No. 37 of 2022
August 10, 2026

Leave a Comment