Company Law
Company Law in UAE
UAE company law is the set of rules that tells you how to set up a company, who can own it, how it will be run and what happens if it is liquidated. The principal law is Federal Decree-Law No. 32 of 2021, which superseded an older law and took effect in January 2022. The latest amendment, Federal Decree-Law No. 20 of 2025, took effect on 15 October 2025.
This law applies to companies incorporated in the UAE mainland. Companies incorporated in free zones such as the DIFC and ADGM are governed by their own legislation. However, if a free zone company does business outside the free zone, UAE company law will also apply to it.
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Types of Companies You Can Set Up in the UAE
The law offers various types of company structures, depending on the size of business and objectives. Here are the main ones:
Limited Liability Company (LLC)
LLC is the most common type of company for small to medium businesses.
Partners are only liable for the money that they invest. Now a company can have multiple classes of shares (LLCs can now issue different classes of shares) with varying rights such as voting rights, dividend rights, liquidation preferences and redemption rights.
It is another new change made under the 2025 law.
Public Joint Stock Company (PJSC)
This company type is used for larger businesses that want to be listed on the stock exchange, or want to raise money from the public.
Managed by a board of directors. Regulated by the Securities and Commodities Authority (SCA).
Private Joint Stock Company (PJSC-Private)
This is like a public company, but shares are not available to the public. Under the 2025 law companies can now raise capital via private placement on UAE financial markets.
General & Limited Partnership
In a general partnership all partners are fully responsible for the company’s debts. In a limited partnership, some partners are only liable for a limited amount, but at least one partner is fully responsible.
Special Purpose Vehicle (SPV)
It is a separate company created for a specific financial or investment purpose.
SPVs are recognised under the Commercial Companies Law and are largely exempted from many of its provisions when subject to separate Securities and Commodities Authority (SCA) rules.
Non-Profit Company
For the first time, the 2025 amendment formally recognises non-profit companies for social, cultural, or charitable purposes, rather than for profit. Any income must be reinvested into the company’s objectives.
Can a Foreigner Own 100% of a UAE Company?
- Yes, and this is one of the biggest changes brought by the 2021 law. Previously, all businesses required at least 51% of a mainland company to be owned by a UAE national.
- This is no longer required for most business activities.
- 100% Foreign Owned Companies are now possible. Now foreign investors can fully own mainland UAE companies in most sectors, without requiring a local sponsor or partner.
- This was one of the big changes that was made to open up the UAE to more foreign investment.
However there are a few business activities which are considered to be “Activities of Strategic Effect” and will still require participation or ownership by a UAE national, which include:
- Defence and military activities
- Banking and insurance
- Telecommunications
- Currency printing and trading in precious metals
- Some fisheries and religious services
So if your business falls into any of these areas you’ll still need to check with the relevant authority or your emirate’s Department of Economy before you proceed.
How to Register a Company in the UAE
To set up a company in the UAE there is a step-by-step procedure to be followed. The procedure is listed as under:
- Choose your business activity: Decide what kind of business activity you want to carry out. Some business activities require additional approvals from the relevant authorities.
- Choose your company type: Depending on the company’s ownership and your business activities, choose whether you want to establish LLC, PJSC or partnership, etc.
- Choose a trade name: Apply for a trade name in the emirate’s Department of Economy (DED). The name should follow the naming rules specified by the UAE.
- Draft Memorandum of Association (MOA) and sign it: This is a legal document which sets out how the business is to be owned, and operated. It must be notarised.
- Get approval and commercial license from the competent authority: At this step, apply the documents at the competent authority of the emirate where your company is being established (DED of Dubai/Abu Dhabi) for license and commercial permit.
- Open a corporate bank account: Once the license has been granted by the relevant authority, a corporate bank account can be opened from any of the UAE banks.
Note: If your company is to set up in a free zone (DIFC, DMCC, ADGM, etc.), there are specific rules applicable to free zones. However, if a free zone company is going to operate on the mainland in the UAE, it also needs to comply with the Commercial Companies Law.
Important Rules Under UAE Company Law
- Share Capital and Ownership
According to the law, a company must have sufficient capital to actually carry out its business, but there is no minimum specified capital for an LLC.
The capital of an LLC must be divided into equal shares, and as per the 2025 law, companies can now issue different classes of shares with different rights (such as multiple voting rights or different dividend amounts).
This is a major change that brings UAE company law into line with international standards.
- Drag-Along and Tag-Along Rights
- These are investor-friendly rights that are now formally recognized by UAE law.
- The drag-along right is where a majority shareholder forces the remaining shareholders to sell their shares if they want to sell the company.
- The tag-along right is where minority shareholders can join in the sale on the same terms. These can now be incorporated directly into the constitution documents of the company.
- Succession Planning
The 2025 law allows shareholders to agree in advance on what happens to a deceased shareholder’s shares. The remaining shareholders can have priority to buy those shares, or the company itself can buy them back. This protects family businesses from disputes after a shareholder passes away.
- Moving Your Company From One Emirate to Another:
The law allows a company to move its legal registration from one emirate to another, or from the mainland to a free zone (and back again), without losing its history or being forced to close and start up again.
This process is known as re-domiciliation, and offers companies far greater flexibility.
Governance Requirements Overview
| Category | Requirement | Details |
Board of Directors (PJSC) | Minimum Number | Must have at least 3 directors (and usually an odd number, up to 11). |
| Nationality | The Chairman and a majority of the board members are not required to be UAE nationals, unless the SCA or a specific Cabinet decision allows otherwise. | |
| Independence | Under 2025 SCA updates, if a Chairman also serves as CEO, at least 75% of the board must be independent. | |
| Record-keeping | All minutes and decisions must be documented and kept for at least 5 years. | |
| Duty of Care | Directors owe a fiduciary duty to the company and can be personally liable for fraud or gross error. | |
Managers (LLC) | Appointment | An LLC must have at least one manager (no maximum limit). |
| Nationality | No nationality requirement; a manager can be 100% foreign-owned and foreign-led. | |
| Term Extension | If a manager’s term expires without a replacement, the law allows for an automatic extension of up to 6 months to ensure business continuity. | |
| Authority | Managers hold full powers to manage the company unless limited by the Memorandum of Association (MOA). | |
| Third-party Reliance | The company is bound by any act performed by the manager in the course of management, even if the manager exceeded their internal authority. |
Company Governance Rules You Must Follow
It refers to the process of operating the company in a fair, transparent, and lawful manner. The UAE law stipulated that companies should hold the below meetings:
- Annual General Meeting: Companies are required to convene an AGM for shareholders on a regular basis. This meeting shall be conducted to inspect the accounts and make important decisions.
- Financial Audit: All companies must have their accounts audited by an approved auditor on an annual basis.
- Ultimate Beneficial Owner (UBO) Registration: Your Company is only as transparent as the real people behind it. So you must register the UBOs in a UBO register. It’s about information, and it’s about fighting financial crime.
- Anti-Money Laundering (AML) compliance: Companies have to comply with UAE AML regulations as per Federal Decree-Law No. 20 of 2018 and its amendments.
- Corporate Tax: You also have to comply with the Corporate Tax of the Federal Decree-Law No. 47 of 2022 which imposed a 9% corporate tax on all companies in UAE from June 2023.
How Is a Company Closed or Dissolved in the UAE?
When a company is wound up voluntarily, when:
- it is closed by the shareholders, or
- at the instance of a court order,
- when it cannot pay its debts, or
- when it has violated the law.
The company will appoint a liquidator, pay all debts, compensate employees and the remainder is then paid out to the shareholders. The company is only fully wound up when it is struck off the commercial register.
Disclaimer: This information is for general purposes only and does not create any client–attorney relationship. It should not be construed as legal advice. For guidance specific to your situation, please consult a qualified legal professional.
Reporting and Regulatory Compliance
Firms that are in the UAE have to continue being in compliance with:
- Licensing authorities
- Corporate registries
- Financial and tax regulations
- Beneficial ownership conditions
- Economic substance regulations
Failure to comply may lead to fines, suspension of licence or prosecution. Compliance matters are often addressed alongside tax and regulatory advisory services.
Dissolution and Liquidation of Company
The lawful termination of businesses is also governed by company law. Liquidation and dissolution processes are aimed at protecting creditors, employees, and stakeholders.
Incorrect closure or abandonment of businesses can cause personal liability of shareholders or managers.
