The UAE has updated its Commercial Companies Law to enhance flexibility for mainland companies. Federal Decree-Law No. 20 of 2025, which amends the 2021 law, came into legal operation on October 15, 2025. Its purpose is to align mainland regulations with those in free zones and international standards, modernizing the corporate framework to keep pace with industry norms.
A significant change is the introduction of multiple share classes for mainland Limited Liability Companies (LLCs). Previously, these companies were restricted to issuing a single share class, which granted shareholders both dividend rights and voting power. This limitation constrained investment options, as selling shares meant relinquishing control. The new provision addresses this by allowing mainland LLCs to issue dividend-only shares without voting rights, thereby enabling companies to attract investment or reward employees through share option schemes while retaining ownership control. This adjustment aligns mainland LLCs more closely with the flexibility enjoyed by DIFC private companies, bridging a long-standing gap in corporate structures.
To implement this change, companies must amend their memorandum of association to reflect the updated legal structure. Additionally, consultation with relevant authorities is essential to ensure compliance with regulatory requirements and to understand the practical aspects of issuing different share classes. This process remains subject to applicable regulatory procedures, emphasizing the need for careful planning and professional guidance.
Enhanced Corporate Flexibility
The amendment also introduces drag-along rights for mainland LLCs, a mechanism previously only achievable through shareholder agreements or incorporation in financial free zones like DIFC. This allows one or more shareholders, subject to the agreed conditions, to require the remaining shareholder(s) to sell their interests or shares to a third party on agreed terms. This enhancement provides greater control and flexibility in corporate transactions, particularly in scenarios involving mergers, acquisitions, or strategic investments.
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Furthermore, the law now permits memoranda to address succession planning for deceased shareholders, a critical aspect for family businesses and joint ventures. This includes rights of first refusal for remaining shareholders and expert valuation in case of disputes. These provisions ensure a smoother transition of ownership and reduce the potential for conflicts, thereby safeguarding the continuity of the business. Both drag-along rights and succession planning require amendments to the memorandum of association and consultation with relevant authorities, showing the importance of legal precision in these matters.
Redomiciliation: Streamlining Business Transitions
The CCL Amendment Law introduces an entirely new provision allowing companies to transfer (or redomicile) their commercial registration from one competent authority to another (including from a free zone to the mainland and vice versa) while retaining their legal personality. This eliminates the historical need to dissolve and re-incorporate, significantly reducing costs and administrative burdens for businesses whose needs evolve over time.
However, the practical implementation of redomiciliation depends on the specific requirements and procedures of the relevant authorities. This area requires careful monitoring for future developments, as the success of this mechanism hinges on clear guidelines and efficient processes. Companies considering redomiciliation should seek professional advice to work through the complexities and ensure compliance with all regulatory obligations.
By Derek Robbins, senior associate at BSA Law.