UAE updates commercial companies law to boost foreign investment.
The UAE has issued Federal Decree Law No. 20 of 2025, amending selected provisions of Federal Decree Law No. 32 of 2021 (the Commercial Companies Law). Public statements accompanying the decree describe the changes as a package of corporate law amendments intended to increase flexibility in how companies are formed and operated in the UAE.
Official announcements indicate that the decree amends 15 articles and introduces one new article, although detailed commentary on each amendment has not yet been released.
What has been confirmed so far
The most clearly articulated change relates to capital and ownership structuring. According to published statements, the use of multiple share and quota classes has been extended to limited liability companies, in addition to public and private joint stock companies.
In practice, this is positioned as allowing more tailored arrangements around economic rights, such as profit distribution, and control rights, including voting mechanisms, within LLC structures.
Why this matters in practice
If implemented as described, multi-class structures could provide founders and investors with greater flexibility when negotiating governance and return profiles. They may also allow companies to accommodate differing investor expectations within a single corporate structure.
For businesses considering fundraising, shareholder reorganisations or future exit scenarios, this additional flexibility could reduce reliance on alternative structuring approaches that were previously required to achieve similar outcomes.
Other themes referenced, but not yet detailed
Beyond capital structuring, public commentary has also referred to reforms aimed at facilitating mergers and exits and expanding access to financing across both domestic and international markets.
The announcements further reference improved coordination between onshore regimes, free zones and financial free zones, including in areas such as formation, licensing, operational continuity and transfers between regimes. However, no procedural guidance, eligibility criteria or implementation timelines have been published at this stage.
Conclusion
Federal Decree Law No. 20 of 2025 represents a significant development in the UAE’s corporate law framework, particularly regarding how LLCs can structure ownership and accommodate different investor classes. The introduction of multi-class share structures for limited liability companies provides businesses with greater flexibility in managing governance and economic arrangements.
However, detailed implementation guidance has not yet been published. While the core amendments to capital structuring have been confirmed, regulations covering mergers, exits, financing mechanisms, and coordination between onshore and free zone regimes remain outstanding. Organisations involved in shareholder restructuring, fundraising, or cross-jurisdictional operations should monitor forthcoming regulations and Cabinet resolutions for practical clarification.
