The UAE overhauls the Commercial Companies Law

On 10 December 2025, the United Arab Emirates announced significant amendments to the Commercial Companies Law, introducing new corporate structuring tools, enhanced shareholder mechanisms, and clarified rules for free zone and foreign companies operating within the UAE mainland.

The updates mark one of the most substantial corporate law reforms in recent years, aligning the mainland framework more closely with international and common-law corporate practices. According to UAE authorities, the amendments aim to support business flexibility, improve cross-border structuring, and enhance investor confidence.

The revised framework provides a more modern and flexible corporate environment for companies operating in the UAE.

The amendments introduce mechanisms widely used in global corporate, merger and acquisition, and investment structures, enabling businesses to streamline governance, improve succession planning, and structure capital more effectively. Key enhancements include:

• Greater flexibility in capital structuring through the introduction of multiple share classes with differentiated rights
• Improved corporate governance and continuity via drag-along, tag-along, and pre-agreed succession mechanisms
• Clearer regulatory treatment for free zone companies conducting mainland activities
• Simplified cross-border and intra-UAE mobility through re-domiciliation

• Free zone laws were clarified, as the amended Commercial Companies Law now covers foreign companies operating in the UAE as well as free zone entities conducting activities outside their designated zones, subjecting such operations to UAE Companies Law for mainland activity.
• The new delocalization mechanism allows companies to move their place of incorporation from a foreign jurisdiction into the UAE, between Emirates, between free zones, or between the mainland and free zones, while retaining the same legal entity. The process requires a shareholder resolution and regulatory approval.
• Companies may now include drag-along and tag-along clauses in their memorandum of association. Succession arrangements may be agreed in advance, and remaining shareholders — or the company itself — may purchase shares. These updates align with standard merger and acquisition and succession mechanisms. They are expected to improve continuity planning.
• Companies may issue preference, restricted, and tiered share classes (A to D), each offering different shareholder rights. This creates capacity for capital structures commonly used in venture financing and growth equity. Technical rules will be clarified via a Cabinet decision.

The amendments introduce a more sophisticated and flexible corporate environment in the UAE, particularly benefiting entities engaged in complex structuring, mergers and acquisitions, group reorganizations, investment activities, and cross-border operations.

Organizations operating in mainland or across free zone–mainland structures may wish to monitor how the updated framework interacts with their governance, ownership, and capital models.

• Activities must align with regulatory and licensing requirements under the amended Commercial Companies Law.
• Entities must comply with applicable governance, reporting, and approval procedures.
• Certain structuring changes — such as re-domiciliation or issuing new share classes — may require competent authorities’ approvals.

We will continue monitoring developments as further guidance becomes available. Organizations seeking clarity on the updated Commercial Companies Law and its regulatory implications are encouraged to contact a member of KPMG’s Regulatory Services team in the UAE.

_{¹ Enterprise News: “UAE overhauls Commercial Companies Law: https://enterprise.news/uae/en/news/story/am/2025-12-10/10}

_{² The National News: “UAE issues amendments to Commercial Companies Law to improve competitiveness: https://www.thenationalnews.com/business/economy/2025/12/09/uae-issues-amendments-to-commercial-companies-law-to-improve-competitiveness/}

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