UAE amends law on commercial companies to enhance competitiveness

The UAE government has amended the law on commercial companies to enhance competitiveness and keep pace with global economic developments.

The recently-issued federal decree introduces a new concept - the non-profit company - that will reinvest its net profits without distributing them to partners or shareholders.

"This further enables social and developmental sectors to operate within a flexible and transparent institutional framework," national news agency WAM reported. 

The introduction is part of the government's efforts to develop legal foundations locally, provide broader options for investors and stakeholders, and modernise the legislation of ownership and financing.

The decree has also provided advanced capital structure options through multiple categories of shares and stakes, with rights such as voting, profit distribution, and priority of redemption and liquidation. 

In financing, the decree permits private joint-stock companies to offer their securities for private subscription on a national financial market, subject to regulations issued by the competent authorities. 

It also regulates the delocalisation of companies and the change of their registration between the seven emirates and financial free zones, while maintaining their legal personality. 

The decree also approves a range of modern contractual mechanisms for managing shares and stocks, including 'tag-along' and 'drag-along' transactions.

It also adds on special procedures for disposition in the event of the death of a partner or shareholder to continue the stability of companies. 

These amendments aim to enhance competitiveness in the business environment and keep pace with global economic development.

The UAE government issues a Federal Decree-Law amending certain provisions of the Law on Commercial Companies pic.twitter.com/BrOHx4U5o1

— UAEGOV (@UAEmediaoffice) December 9, 2025