Recent amendments to the UAE Commercial Companies Law have significantly expanded and clarified the concept of Emirati corporate status, formally recognising a broader range of companies as Emirati entities for legal and commercial purposes. The reforms apply across the UAE’s business ecosystem, including mainland companies, free zone entities, and financial free zone companies, and form part of the government’s wider objective to grow the country’s active business base to two million companies by the end of the decade.
The amendments were introduced through Federal Decree-Law No. 20 of 2025, which updates key provisions of the existing Commercial Companies Law and modernises corporate regulation in line with international standards.
Corporate ‘Citizenship’
Under the amended framework, any company incorporated in the UAE is legally recognised as an Emirati company, regardless of the nationality of its shareholders, owners, or investors. This concept often described as corporate “citizenship” or Emirati status applies strictly to the legal identity of the company itself and does not extend to individuals.
The clarification removes long-standing ambiguity surrounding the status of free zone and financial free zone entities and confirms that all UAE-established companies qualify equally as Emirati entities under the law.
From a legal and regulatory perspective, this recognition is particularly relevant in the context of the UAE’s expanding network of Comprehensive Economic Partnership Agreements (CEPAs) and other international trade arrangements, where eligibility may depend on corporate nationality and place of establishment.
Trade and Market Access Implications
Companies recognised as Emirati entities are better positioned to leverage the UAE’s trade agreements, which aim to reduce tariffs, streamline customs procedures, and facilitate access to high-growth international markets. By reinforcing the Emirati legal identity of UAE-incorporated companies, the amendments strengthen their standing in cross-border trade, regulatory engagement, and contractual negotiations abroad.
The Ministry of Economy has indicated that the reforms are expected to increase new company registrations by 10–15 per cent in the first year, supporting the UAE’s long-term economic diversification and growth strategy.
Key Structural Amendments to the Commercial Companies Law
In addition to clarifying corporate status, the amendments introduce several material changes affecting corporate structuring, governance, and transactional activity.
- Multiple Classes of Shares
A notable reform is the express permission for multiple classes of shares in Limited Liability Companies (LLCs) and joint stock companies. Companies may now issue shares with differing rights, including:
- Differential or weighted voting rights
- Preferred or priority dividend entitlements
- Special control or protective rights for founders or strategic shareholders
This development significantly enhances structuring flexibility for startups, family businesses, venture capital-backed companies, and private equity investments, aligning UAE company law more closely with established international corporate regimes.
- Preservation of Legal Identity Across Jurisdictions
The amendments allow companies to transfer their registration between emirates, and between free zones and the mainland, without loss of legal personality. This provision reduces restructuring risk, avoids dissolution and re-incorporation, and supports business mobility within the UAE.
- Mainland Branches for Free Zone Companies
Free zone entities are now explicitly permitted to establish branches on the mainland, subject to applicable licensing and regulatory requirements. This removes a structural limitation that previously restricted operational expansion for many free zone companies.
- Enhanced M&A and Shareholder Exit Provisions
The updated law introduces clearer rules governing:
- Shareholder exits
- Mergers and acquisitions
- Corporate restructurings
These provisions are intended to enhance legal certainty, reduce disputes, and support increased transactional activity, particularly in complex or cross-border transactions.
- Introduction of Non-Profit Commercial Companies
The amendments also introduce a regulated framework for non-profit commercial companies, enabling structured social and impact-driven commercial activity within the corporate legal system.
Governance and Compliance Considerations
From a legal compliance perspective, companies will need to review and, where necessary, update their memoranda and articles of association to reflect new share class structures, governance rights, and transfer mechanisms. The reforms place greater emphasis on clear documentation, transparent shareholder arrangements, and alignment with the updated statutory framework.
The expanded recognition of Emirati corporate status, combined with increased flexibility in share structures, mobility, and governance, represents a comprehensive modernisation of UAE company law. The reforms enhance legal certainty, improve access to international trade benefits, and support the UAE’s ambition to significantly expand its corporate base.
For businesses, investors, and legal practitioners, the amendments create new opportunities for sophisticated structuring, cross-border expansion, and long-term investment planning within a stable and internationally aligned legal environment.
