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A new era for corporate structuring, investment and governance in the UAE

The UAE has implemented a series of transformative amendments to the Commercial Companies Law, fundamentally reshaping how companies are formed, financed, governed and exited. These changes move UAE company law away from rigid formality and into a more modern, commercially fluent, and investor-aligned regime.

What emerges is not incremental reform, but a functional overhaul of how capital, control and purpose are now legally engineered inside the UAE.

This alert distils the most commercially significant reforms and explains what boards, founders, investors and private offices should consider now.

1. Purpose Enters the Code: Non-Profit Companies Are Now Corporate Citizens

For the first time in UAE corporate history, the Companies Law now formally recognises non-profit companies.

This goes far beyond charitable registration. The reform establishes a legal category for companies that conduct economic activities but reinvest profits into defined purposes rather than distribute them to shareholders. The law now formally embraces:

• Social enterprises;

• Blended-value structures;

• Foundations with operating subsidiaries;

• Impact investment platforms; and

• Purpose-driven holding companies.

This moves UAE corporate law beyond “profit only” and into the global mainstream of purpose-aligned enterprise. Companies may now legally operate where mission and margin coexist.

Crucially, the framework delegates governance, licensing, exemptions and audit thresholds to Cabinet resolution, signalling a shift from rigid statute to principle-driven regulation.

2. From Free Zone to Mainland: The End of Corporate Border Nominalism

A second cornerstone reform redraws the boundary between free zones and the mainland.

The law now makes it clear: Free zones are economic zones — not legal shields.

Free zone and financial free zone companies (including DIFC and ADGM entities) that operate in the mainland must establish a legal presence governed by UAE Companies Law.

What this means in practice:

• A free zone licence is no longer a proxy for onshore trading rights;

• Operating contracts, delivering services or invoicing onshore requires a local legal presence;

• Compliance is now cumulative across: licensing, tax, labour, economic substance and governance;

• The concept of “operating by structure” has been replaced by “operating by substance.”

The regulatory message is unmistakable: Where you operate now matters more than where you incorporate.

The reform significantly increases exposure for unregularised groups and creates direct ramifications for contract enforceability, banking compliance and regulatory sanctions.

3. Shareholder Control Goes Statutory: Drag-Along, Tag-Along and Exit Rights Now Law

Perhaps the most market-moving reform for founders and investors is the express statutory recognition of:

• Drag-along rights;

• Tag-along rights;

• Forced sale provisions;

• Constitutional exit mechanics.

These features, historically reliant on shareholder agreement drafting and judicial construction, are now:

• Enshrined in law;

• Constitutionally enforceable; and

• Insulated from validity challenge.

Equally important: succession risk is now statutorily managed.

Companies may codify in their constitutional documents:

• What happens on shareholder death;

• Priority rights of purchase;

• Valuation mechanisms;

• Court-appointed expert resolution.

This closes one of the most disruptive risk gaps in UAE corporate law, where shares passed automatically to heirs, often paralysing governance for years.

In one regulatory stroke, the reform turns shareholder arrangements from private contract into legal infrastructure.

4. The Birth of “Listed Private Capital”: Capital Market Access Without an IPO

For the first time in UAE corporate history, private joint stock companies may access capital markets without converting into public entities.

Article 32 introduces a regulated private placement regime allowing:

• Listed issuance without IPO conversion;

• Exchange-based capital raising;

• Institutional-only offerings;

• Controlled fundraising without retail participation.

The law defines private placement not by size — but by investor identity.

• No advertising.

• No mass distribution.

• Only pre-identified professional investors.

This reform creates an entirely new capital class: A regulated middle market between venture capital and IPO.

It unlocks:

• Structured exits;

• Cornerstone placements;

• PE liquidity events;

• Late-stage funding.

All while SCA retains full approval authority, oversight and investor classification control.

This is capital markets liberalisation with supervision, not deregulation.

5. Multi-Class Equity for LLCs: Capital Engineering Enters Domestic Law

For decades, UAE LLCs had one equity architecture: equal shares, equal rights, equal economics.

That era has closed.

LLCs may now issue multi-class shares, enabling:

• Preferential economics;

• Differential voting;

• Liquidation priority;

• Growth equity waterfalls.

This reform places VC and PE structuring inside domestic UAE law, eliminating the historical necessity of offshore holding entities.

Equally significant: All share classes must now be publicly disclosed and registered, introducing investor protection through transparency.

The legal outcome: Negotiated capital structures now have statutory legitimacy.

Why This Matters

Collectively, these reforms execute three strategic moves:

1. Modernisation
The UAE Companies Law now reflects how companies are actually built, funded and exited.

2. Diversification
The law enables new corporate forms that attract social capital and global investment.

3. Positioning
The UAE now legally competes as a jurisdiction for:

• Impact structures;

• Institutional private capital;

• Venture-backed exits;

• Sophisticated governance.

This is corporate law evolving into economic policy infrastructure.

What Should Boards and Investors Do Now?

We recommend:

• Reviewing constitutional documents for exit and transfer mechanics;

• Assessing free zone operational exposure;

• Restructuring private funding strategy where IPO is no longer the default;

• Revisiting governance frameworks for succession and control;

• Assessing capital structures for potential class architecture.

How INP Can Help

Our corporate and capital markets teams advise on:

• Company restructurings under the amended law;

• Capital structuring and shareholder engineering;

• Free zone compliance transitions;

• Regulated private placings;

• Exit and succession architecture.

Please contact your usual INP partner or email [email protected] for a tailored discussion.

Download or Read the Detailed Executive Summary

For a comprehensive, section-by-section legal analysis of all amendments, including the exact statutory wording changes and their strategic consequences, download our full Executive Summary.

Download or Read Full Analysis: UAE Companies Law Amendments Executive Summary (PDF)

By: Ahmed Ibrahim | Managing Partner