A new investor, a proposed business sale or a move between licensing authorities can expose weaknesses in company documents prepared years earlier. A lawyer in Dubai reviewing these plans should consider the current UAE Commercial Companies Law alongside the company’s registered constitution, ownership arrangements and regulatory approvals. The amendments offer additional ways to structure investment and business continuity, but each option has conditions that must be addressed before a transaction is completed.
Federal Decree Law No 32 of 2021 remains the principal federal companies legislation, as amended by Federal Decree Law No 20 of 2025. Its updated provisions cover matters including different classes of LLC ownership interests, agreed sale rights, transfers of registration and management vacancies. Implementing decisions issued in 2026 also affect particular transactions. For businesses, the useful question is which changes support the proposed deal and what documentation will make them effective.
In its 6 January 2026 briefing on the amendments, the Ministry of Economy and Tourism reported more than 1.4 million companies in the UAE by the end of 2025. This is a national business population figure, not a count of companies eligible for every new share class, subscription or registration-transfer mechanism.
Establish which rules govern the company
Start with the legal entity appearing on the licence and commercial register. A mainland LLC, a private joint stock company and a financial free zone company can face different requirements even where they carry on similar businesses.
Articles 3 and 5 address the relationship between the federal law and free zone operations. Matters specifically regulated by the relevant free zone legislation remain subject to that framework. Where the applicable zone legislation permits operations outside the zone, branches or representative offices established outside it are subject to the federal companies law. Other licensing and regulatory requirements remain relevant. A free zone registration therefore does not, by itself, establish permission for every proposed mainland activity.
For a group with several entities, identify which company will receive the investment, hold the assets and sign the customer contracts. Changing one entity’s constitution does not automatically change the rights or licences of the rest of the group.
Match investment rights to registered ownership interests
Article 76 permits an LLC to classify ownership interests with different values, voting rights, redemption rights, priorities in profit distribution or liquidation, and other rights or restrictions. The memorandum must define the arrangement, and the class and its rights must be recorded in the commercial register. The article also provides for Cabinet rules governing the classes and their conditions and procedures.
This matters when an investor contributes capital but does not want the same rights as the founder. An economic preference should explain when it applies, how it is calculated and what happens if profits are insufficient. Voting arrangements should address the decisions that require approval and how deadlock will be handled.
Before promising a particular class in an investment agreement, confirm the applicable implementing rules and the registrar’s acceptance requirements. Then align the memorandum, investment agreement and ownership records. A financial model showing a preferred return is not a substitute for the corporate provisions required to establish that right.
Agree the mechanics of a future business sale
Article 14 allows LLCs and private joint stock companies to include agreed compulsory sale and participation rights in their constitutional documents. These are often called drag along and tag along rights. One arrangement can require other owners to join a sale when specified conditions are met; another can allow an owner to participate on the buyer’s agreed terms. The rights depend on the relevant provisions and their conditions rather than arising automatically whenever a majority wishes to sell.
The drafting should address the trigger, notice, consideration, completion process and allocation of sale liabilities. For example, a minority investor may accept the sale price but object to giving warranties about a business they did not manage. Resolve that issue when negotiating the clause rather than after a buyer has set a completion deadline.
Article 14 also permits provisions dealing with a deceased owner’s interests, including purchase priority for the remaining owners or the company. The price may be agreed with the heirs; disagreement can require court valuation through experts. Such provisions should be coordinated with succession advice and the company’s ability to fund the purchase.
Check whether registration can move without replacing the entity
Article 15 bis provides a route for transferring registration while retaining legal personality. The relevant registers must permit the transfer, both authorities must approve it, and no recorded restriction may prevent it. Corporate approval and publication requirements also apply, with additional approvals for joint stock companies.
Transfers between a free zone and a mainland authority must meet the applicable conditions, including adjustment to the receiving framework. Transfers involving financial free zones are addressed through separate Cabinet controls. A proposed move should therefore be checked with both authorities before contractual commitments assume that it can proceed.
Retaining the entity can support continuity, but the transaction team should still review financing documents, security, leases and regulated permissions. A change in registration may engage a contractual notification or consent clause even where the company itself survives. Prepare a list of affected arrangements and obtain the required responses before completion.
Deal with management changes before authority becomes uncertain
Under Article 85, an LLC manager may submit a written resignation to the general assembly and notify the competent authority with a copy. The assembly has 30 days to decide on it, after which the resignation is treated as effective unless the memorandum or appointment contract provides otherwise. The separate rules governing expiry of an individual manager’s appointment require attention to notification and replacement.
The same article allows an expired board of managers to continue for a period of no more than six months where it has not been reconstituted. This should not be treated as a general extension for every individual manager. Companies should record appointment dates, replacement decisions and the people authorised to sign while the change is being completed.
Review the current rules before transferring private company shares
Private joint stock companies have a regulated route to private subscription through UAE securities markets. This should be distinguished from advertising securities to the public, which is separately controlled. A private joint stock company that offers its securities through private subscription and is listed on a UAE financial market is exempt from the Article 266 restriction period.
Share transfer restrictions also require a current review. For private joint stock companies outside that exemption, Article 266 sets a baseline requiring publication of the balance sheet and profit and loss account for at least one fiscal year beginning with registration in the commercial register. Ministerial Decision No 83 of 2026 provides specified reductions and exemptions. For example, publication after company registration of two consecutive quarterly financial statements reviewed by its duly licensed external auditor can support a reduction to seven months. Other provisions concern specified share classes, employee incentives and qualifying transactions.
The decision requires Ministry action in coordination with the competent authority, and completion and notification requirements apply. Some exemptions or reductions affect only the shares concerned. A seller should obtain confirmation of the route applicable to their shares rather than assume the entire company has unrestricted transferability.
What to prepare for a lawyer in Dubai
Provide the current licence, commercial register extract, memorandum and amendments, shareholders’ agreement, investment terms, manager appointments and relevant resolutions. Explain the commercial outcome sought and identify any promised completion date.
The legal review should produce a coordinated set of amendments and an approval sequence. It should also identify records that will change after completion. Beneficial ownership needs particular attention where voting or control rights change. Cabinet Resolution No 109 of 2023 requires covered entities to maintain accurate information and addresses control beyond a simple shareholding percentage, subject to its scope and exclusions.
Clear records help establish who approved the transaction, what rights were created and when the changes became effective. They also make later financing, succession planning and dispute resolution more manageable.
Frequently Asked Questions
1. Must every existing company rewrite its memorandum
The amendments should be reviewed against the company’s circumstances. An existing company wishing to introduce new ownership classes or sale rights will need to consider the necessary constitutional changes and registration requirements. The appropriate work depends on its legal form and intended transaction.
2. Can a shareholders agreement alone create a registered share class
Article 76 requires the LLC memorandum to define the class arrangement and the commercial register to record the class and its rights. A private agreement should be coordinated with those requirements and the applicable implementing rules.
3. Does transferring registration remove earlier debts
A transfer preserving legal personality does not create a new company free of its previous obligations. Existing liabilities and contractual commitments should be reviewed as part of the proposed move, together with any required consents and regulatory conditions.
4. Does a preferred return in a financial model establish a share class?
A financial model does not replace the required corporate provisions. Review the applicable implementing rules, define the class in the LLC memorandum and coordinate the commercial register and investment documents.
5. What should be checked before changing the company’s registration?
Confirm both authorities’ requirements, approvals and any restrictions. Review financing, security, leases and regulated permissions for notice or consent requirements, and identify the records that must be updated after completion.
About the author
Dr. Hassan Elhais is a Senior Legal Consultant at Amal Al Rashedi Lawyers and Legal Consultants in Dubai. He advises on UAE family, civil, commercial and criminal law matters.
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About the Author
Dr. Hassan Elhais publishes analysis of UAE business law matters, including commercial relationships, company matters and business disputes. For readers comparing the best lawyers in Dubai, his writing offers insight into the legal questions surrounding these topics. Explore his published work and practice-area information for further context.
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