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New Limited Liability Companies Law

In every part of the globe, governments strive to provide maximum independence to investors, both local and foreigners, to participate in the country’s financial growth. The United Arab Emirates is one of those emerging economies that struggled to maintain its free business index according to developed economies; for such purpose, the government changed the significant commercial companies’ laws in the last quarter of 2021. These changes have been finalized and considered part of the Royal Decrees since January 2022. According to the authorities of the Legal Affairs Department, there is a change in the Federal Law No. 2 of 2015; and it was replaced by new Decree No. 32 of 2021. The purpose behind such changes in Commercial Companies Law is to improve the concepts of overseas ownership and control, corporate management, and minority protection. As per the new Commercial Companies Laws, two new forms of the companies have been introduced by the government; a) SPV “Special Purpose Vehicle,” b) SPAC “Special Purpose Acquisition Company.” Similarly, there are some changes in the Limited Liability Companies laws. In addition, several changes have been explored in Joint Stock Companies. 

Limited Liability Company

DED (Department of Economic Development” requires all mainland (onshore) UAE commercial organizations to be regulated and managed under the UAE Commercial Companies Law (CCL). The key benefit for international investors starting a business in the UAE is that opposing the companies like in Free Zones, there are no geographical restrictions on economic activity or office/premises placement. A mainland firm can operate everywhere in the UAE or the broader GCC region, which include all Free Zones, and therefore has a broader selection of real estate possibilities to choose between. According to details, while establishing an LLC, the foreigner must maintain amalgamation with a local, national partner. LLC is the most common kind of business in the mainland of the UAE. The DED is the state agency that is empowered to grant all

LLC certificates and is still in charge of categorizing and monitoring the sorts of business growth that may be done. However, the LLC is not limited to where it can operate in the Emirates or the GCC (unlike Free Zone firms). There are no restrictions on ownership or the frequency of visas that An LLC may engage in commercial activities except insurance, financing, and investing. There are almost no limitations on the number of visas that can be requested. 

Click here: Importance of Corporate Governance

Changes in the Laws of LLC

  • Board Managers Term Expiration

According to Federal Decree No. 32 (2021), if the term of board managers has expired and no new board managers nominated, a new approval has been given that the existing board can manage the Limited Liability Company for a particular period of six months. After that, the Limited Liability Company should appoint a new committee. If a new board may not be established, the DED (Department of Economic Development) may specify the board. However, such a board may not work after one year of its appointment; and LLC needs to appoint its committee of managers. 

  • Supervisory Board Appointment

According to the new Commercial Companies Law of 2021, the number of required shareholders has been increased from seven to fifteen. Such a board must be appointed from three shareholders who can supervise the company’s annual reports, budgeting, and profit distribution. 

  • Legal Reserve Decrease

The new Commercial Companies Law, 2021 reduced the amount of legal reserve, which could be allocated from 10% to 5%; however, as required by the CCL 2020, the CCL 2021 stated that investors might halt this distribution if the legal reserve exceeds 50% of the ordinary shares. 

  • Meetings of LLC General Assembly

  1. Quorum

There has been a change to the quorum criteria. When a first general assembly session has not been quorate as well as a second session is called, there may be no quorum restriction, and now the second session would be considered legitimately formed irrespective of the number of attendance.

      2. Notice

The notice time for calling a general meeting will be at least 21 days, up from 15 days formerly. This gives investors more time to prepare for general assembly sessions.

Get in touch with our Corporate lawyers now to learn more about our New Limited Liability Companies Law.


Emmerson A, “Commentary on the UAE Arbitration Chapter, by Gordon Blanke” (2018) 34 Arbitration International 167

Feulner GR, “The UAE Commercial Companies Law: Recalled to Life” (2018) 4 Arab Law Quarterly 216

Gomtsian S, “Private Ordering of Exit in Limited Liability Companies: Theory and Evidence from Business Organization Contracts” (2021) 53 American Business Law Journal 677

Hosni SM, “Commercial and Civil Companies in UAE Law” (2017) 7 Arab Law Quarterly 159

Hazim Darwish

Hazim Darwish, is a Senior Partner of HHS Lawyers in UAE. Practicing law for almost a decade, he has in-depth knowledge on UAE legislation with particular expertise on legal drafting, contract drafting, labor disputes, family law, and regulatory compliance for business organizations. Hazim Darwish also provides counsel on legal rights and obligations in the UAE to clients, including individuals and businesses subject to investigation or prosecution under Criminal Law by major regulators.