The issuance of Federal Decree-Law No. 20 of 2025 on October 1, 2025 (the “Amendment”) represents one of the most consequential developments in the evolution of the UAE’s corporate legislative architecture since the introduction of the Federal Decree-Law No. 32 of 2021 on Commercial Companies (the “Commercial Companies Law”). While the Commercial Companies Law marked a decisive shift toward modernising the corporate environment and liberalising foreign ownership, the Amendment builds upon that foundation with a targeted and sophisticated recalibration aimed at enhancing corporate flexibility, strengthening governance, and facilitating mobility of corporate structures across the UAE.

Key Amandments:

1. Clarifying Jurisdictional Boundaries and Company Nationality

One of the most important elements of the Amendment is its clarification of the legal treatment of free-zone and financial-free-zone entities. Although entities formed in free-zones have historically enjoyed a high degree of regulatory autonomy, the Amendment confirms two pivotal principles.

First, all companies established in the UAE — whether onshore, free-zone, or within financial free- zones — possess UAE nationality, subject to the restrictions imposed by the laws governing foreign ownership and strategic activities. This clarification aligns UAE corporate doctrine with prevailing international norms on nationality of incorporation and reduces ambiguity for cross- border transactions and treaty-based interpretations.

For practitioners, this represents a material development. Free-zone companies participating in mainland tenders, joint ventures, asset-holding structures, or direct distribution chains will now need to reassess their compliance posture, amend constitutional documents, and potentially harmonise governance structures to meet Commercial Companies Law expectations.

2.   A Formal Re-Domiciliation Mechanism: Corporate Mobility Reimagined

Perhaps the most innovative reform introduced by the 2025 Amendment is the creation of a structured, statutory re-domiciliation mechanism. Under this new framework, companies may transfer their registration between:

while preserving the company’s legal personality, contractual continuity, and corporate history.

This shift has profound implications. Until now, migrating a company across jurisdictions typically required a time-consuming process of dissolution, re-incorporation, or corporate transformation— often with material legal and commercial risk. The new regime aligns the UAE with leading global jurisdictions that recognise corporate mobility as a driver of market competitiveness.

The mechanism further mandates coordination between both the “departing” and “receiving” registries, publication requirements, and vetting for pending liabilities. In practice, this offers multinational groups, family-owned conglomerates, and venture-backed start-ups far greater agility in refining their operational footprint across the UAE, particularly when aligning regulatory requirements with commercial realities.

3.   Market-Standard Shareholder Rights and Modernisation of Capital Structures

The Amendment takes a significant step toward harmonising UAE corporate governance with international investor expectations. Three elements are particularly noteworthy:

a.  Drag-along and Tag-along Rights

For the first time, the Commercial Companies Law explicitly recognises drag-along and tag-along rights. This represents a major breakthrough for private equity, venture capital, and joint-venture structuring. Previously, lawyers were compelled to draft complex contractual workarounds to mirror market norms; the Amendment now embeds these protections directly in the statutory framework and allows them to be incorporated into LLC and private JSC constitutional documents.

By allowing multiple share classes — including economic-only, voting-only, preferred, or hybrid structures — the Amendment modernises the UAE’s capital markets landscape. This change is transformative for early-stage financing, portfolio restructuring, and investor-rights tailoring.

c.  Succession and Valuation Mechanics

The Amendment introduces clearer provisions for shareholder succession, valuation mechanisms, and dispute-resolution pathways, providing greater certainty in family-owned business transitions and shareholder exits.

Collectively, these reforms bring the UAE corporate framework into far closer alignment with sophisticated international markets and significantly reduce transactional friction.

4.   Recognition of Non-Profit Companies

The 2025 Amendment also introduces a statutory basis for non-profit companies, a previously unregulated corporate form under the Commercial Companies Law. These entities must reinvest any surplus in furtherance of their objectives. The forthcoming Cabinet decisions will determine the licensing, governance, and permissible scope of such companies.

This development is timely. The UAE’s acceleration in philanthropic initiatives, foundations, academic institutions, and ESG-driven organisations requires a well-defined legal vehicle capable of interacting with donors, regulators, and international partners with clarity and accountability.

5.   Corporate Transformations and Capital-Structuring Simplification

The Amendment streamlines corporate transformations — allowing companies to convert from one form to another without dissolution, founders’ committees, or unnecessary procedural duplication. This facilitates more efficient corporate reorganisations, restructurings, and M&A integration. For groups undertaking pre-IPO positioning or readiness exercises, these changes materially de-risk timelines.

Similarly, capital-structuring provisions now allow greater flexibility in subscription periods, founders’ thresholds, valuation of in-kind contributions, and share-issuance processes, giving regulators discretion to align oversight with the needs of modern capital markets.

6.   Looking Ahead: Areas Requiring Regulatory Clarification

As with any major legislative shift, the 2025 Amendment raises questions requiring follow-up regulation. It is worth monitoring the following:

Additionally, companies incorporated under the Commercial Companies Law must evaluate whether transitional steps are required to ensure compliance with the new regime – particularly regarding governance documents, capital-structure provisions, and cross-border operational footprints.

The 2025 Amendment marks a decisive evolution in the UAE’s corporate landscape. By embracing international norms, strengthening governance, facilitating mobility, and injecting flexibility into investor arrangements, the Amendment enhances the country’s competitiveness as a jurisdiction of choice for multinational groups, private equity sponsors, and high-growth emerging companies.

As with all major reforms, the full impact will depend on the clarity and timeliness of implementing regulations. Nevertheless, the Amendment unmistakably signals the UAE’s continued commitment to legal modernisation and its ambition to position itself as a premier global hub for investment and corporate innovation.

On the next page you can read UCL Co-Founder Dr. Khaled Ali Alhadhrami’s views on this matter.

This legal alert was prepared by:

Dr. Khaled Ali Alhadhrami, UCL Co-Founder, and Ratmir Proskurnov, UCL Partner and Head of International Legal Practice

If you have any questions about how Federal Decree-Law No. 20 of 2025 may affect your business or would like assistance in assessing and implementing any of the changes outlined above, UCL team is ready to help.

Dr. Khaled Ali Alhadhrami shared his thoughts on the Amendments

Dr. Khaled Ali Alhadhrami

UCL Co-Founder

As an academic legal professional reviewing Federal Decree-Law No. (20) of 2025, I believe the amendments bring meaningful and practical improvements to the UAE’s Commercial Companies Law. Before these changes, several areas of the law were more rigid and less detailed — company structures were limited, valuation standards were not fully unified, governance procedures for managers lacked clarity, and transferring registrations between free zones and the mainland was not always straightforward. The new amendments shift the framework toward greater flexibility and transparency. One of the biggest advantages is the added flexibility now given to companies—whether in choosing their structure, organizing their capital, or creating different types of shares. This makes it easier for businesses to grow and adapt their internal arrangements based on their real commercial needs.

The amendments also make several key areas clearer and more transparent, such as how non- cash contributions are valued, the responsibilities and governance of managers and boards, the rules for transferring shares, and the process of converting a company from one legal form to another. These changes help reduce confusion and ensure that partners, shareholders, and regulators all work within a clear and predictable legal framework.

Another strong point is the improved coordination between free zones and the mainland. The updated rules on transferring a company’s commercial registration — while keeping its legal personality — give businesses greater mobility and flexibility. The law also enhances investor protection by strengthening oversight on share offerings, valuation procedures, and overall compliance.

Overall, the 2025 amendments show the UAE’s continued focus on building a modern, transparent, and investment-friendly business environment. They support economic growth while reinforcing solid standards of corporate governance