Federal Decree Law No. (20) of 2025 (the Amendment) introduces a series of targeted but meaningful changes to the UAE Commercial Companies Law (Federal Decree Law No. (32) of 2021) (the CCL). While several of the amendments aim to refine the existing framework, others materially expand the range of tools available to onshore UAE companies, reduce certain practical constraints between mainland and free zone regimes (including by clarifying the application of the CCL to free zone branches and representative offices operating onshore), and seek to strengthen the legal infrastructure underpinning acquisitions, exits, and minority investments.
These reforms affect not only how UAE businesses are structured and reorganised, but also how transactions are designed, documented and implemented. In particular, the Amendment aims to enhance statutory deal mechanics, introduce greater flexibility in managing ownership transitions and exits, and expand the options available for pre- and post-transaction structuring.
This GT Alert considers the Amendment from both a corporate structuring and M&A perspective. Given the breadth of the changes, the analysis below first addresses those developments most relevant to corporate structuring decisions, before turning to their implications for transaction design, execution risk, and deal sequencing in practice.
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Key Takeaways |
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PART 1: Corporate Structuring Implications
Redomiciliation and Continuity of Legal Personality
The most consequential development the Amendment introduces is the formal recognition of redomiciliation within the UAE with continuity of legal personality.
Subject to regulatory and shareholder approvals, a company may now transfer its commercial registration:
- from one Emirate to another;
- from a free zone to an Emirate; or
- from an Emirate to a free zone,
while remaining the same legal entity, with its assets, liabilities, contracts, and obligations continuing uninterrupted.
Historically, achieving a similar outcome required a business and asset transfer from one entity to another, followed by the original company’s liquidation. That process was often costly, time-consuming, and operationally disruptive, particularly where licences, employees, banking arrangements, or third-party contracts were involved.
Redomiciliation introduces a fundamentally different structuring option. Rather than rebuilding a corporate presence, companies can now migrate it.
The introduction of statutory redomiciliation also reflects a broader shift in the CCL towards recognising continuity of legal personality in corporate reorganisations more generally. This approach is echoed in the streamlining of conversion rules, which now permit companies to convert between legal forms while preserving legal personality, subject to applicable regulatory approvals.
Practical Implication
This reform may materially enhance flexibility for:
- group simplification and rationalisation within the UAE;
- repositioning operating companies to align with regulatory, licensing, or tax objectives;
- accessing facilities or permits available only in specific Emirates or free zones;
- aligning governance frameworks (for example, moving into Dubai International Financial Centre (DIFC) or Abu Dhabi Global Market (ADGM) structures);
- succession planning and long-term ownership restructuring; and
- preparatory steps ahead of mergers, acquisitions or exits.
That said, the effectiveness of this tool may depend on forthcoming cabinet-level implementing regulations and the approach regulators, free zone authorities, and counterparties take.
Expanded Flexibility in Constitutional Documents (LLCs and Private JSCs)
The Amendment expressly allows certain provisions that were traditionally confined to private shareholder agreements to be embedded directly into the constitutional documents of limited liability companies and private joint stock companies.
These include:
- drag along and tag along rights; and
- mechanisms regulating the treatment of shares on the death of a shareholder.
Practical Implication
From a structuring perspective, this marks a meaningful shift. For many years, practitioners have relied on parallel shareholder agreements to house economic and exit rights, while accepting enforceability and implementation risks in an onshore context.
Embedding these rights in the memorandum or articles may:
- strengthen enforceability as a matter of statutory corporate mechanics;
- reduce reliance on purely contractual remedies; and
- simplify long term ownership planning for founder led and family businesses.
That said, practical execution remains key. Local notary practice has historically required unanimous shareholder participation for share transfers and memorandum or articles amendments. Whether drag or tag along mechanics will be implemented smoothly in the face of shareholder default remains to be seen, and careful drafting might be essential to anticipate procedural resistance (for example, through pre-agreed execution mechanics).
Different Classes of Shares for Onshore Companies
The Amendment also introduces an express basis for different classes of shares in onshore companies, allowing for differentiated economic and governance rights (for example, voting, distribution, or redemption preferences).
Practical Implication
This reform narrows the historical gap between onshore companies and DIFC/ADGM vehicles, particularly for joint ventures, growth stage investments, and minority protected structures.
However, it may not displace free zone holding structures entirely. In practice, DIFC and ADGM entities may still be preferred where parties seek:
- English law style corporate concepts;
- ease of share transfers and pledges;
- court systems with established common law-based jurisprudence; or
- reduced procedural formalities.
- founder contributions of IP or other non-cash assets;
- internal reorganisations and roll ups;
- consolidation of operating assets at holding company level; and
- pre-transaction restructuring where asset injections form part of the overall equity story.
- cross border shareholder participation;
- group-wide restructuring exercises; and
- greater efficiency in the execution of multi-step corporate actions.
- as pre-transaction structuring steps to simplify group structures or reposition a target into a more suitable UAE jurisdiction for licensing, regulatory, or governance reasons;
- as post-completion integration tools, supporting consolidation and group rationalisation without the disruption typically associated with asset transfers and novations; and
- where legal form changes are required to support investment, exit, or listing strategies, including conversions from LLCs to private joint stock companies in growth or exit contexts.
- vendor rollover structures and share for asset arrangements; and
- equity issuance as part of consideration mechanics, including where an onshore LLC is issuing consideration shares to a seller.
- support partial exits or minority sell downs;
- provide interim liquidity ahead of a full exit; or
- facilitate growth stage capital raises alongside strategic transactions.
In-Kind Capital Contributions and Valuation
The Amendment clarifies and reinforces the ability of companies to accept in-kind contributions to share capital, subject to regulated valuation standards.
Practical Implication
From a structuring perspective, this might open up greater flexibility for:
While in-kind contributions were not entirely novel under the previous regime, the clarification and formalisation of valuation standards might reduce uncertainty and make this route more attractive, where it was previously avoided in favour of post incorporation transfers.
Non-Profit Companies in an Onshore Context
The Amendment introduces statutory recognition of non-profit companies, whose profits are reinvested to achieve stated objectives rather than distributed to shareholders.
Although further cabinet regulations are expected, this development may allow certain mission driven or philanthropic activities to be structured onshore, rather than exclusively through free zone foundations or foreign vehicles.
Practical Implication
For corporate groups and family conglomerates, this may become relevant where charitable or social impact initiatives are intended to sit alongside commercial operations within a single jurisdictional framework.
Procedural Streamlining: Electronic Authentication
A more technical, but still meaningful, change is the express recognition of electronic authentication of constitutional documents, subject to the competent authority’s requirements.
While not transformative in isolation, this aims to support:
Practical Implication
Over time, this may contribute to a more efficient onshore restructuring environment, particularly for international groups.
PART 2: M&A Implications
Recalibrating Deal Structures
One of the most meaningful transaction focused developments the Amendment introduces is the ability to include drag along and tag along provisions directly in the constitutional documents (memorandum or articles) of onshore companies.
Historically, transaction parties have relied on private shareholder agreements to implement exit mechanics, while accepting enforcement and execution risk in an onshore context. The Amendment seeks to provide a clearer statutory footing for these concepts by allowing them to sit within the memorandum or articles.
The Amendment does not override preemption rights as a matter of law. Preemption remains the default position under the CCL. What has changed is that drag along, tag along, and succession mechanics, including express waivers or disapplication of preemption in defined scenarios, may now be embedded directly in the constitutional documents. Any override of preemption therefore operates by agreement, rather than by statute, but with enhanced enforceability in practice.
Practical Implication
From an M&A perspective, this development is relevant not only in control acquisitions, but also in transactions where a minority shareholder remains invested post completion. It gives parties the option to regulate key aspects of the majority/minority relationship at the onshore level through a combination of constitutional documents and a shareholders’ agreement, rather than defaulting to a different holding jurisdiction solely to achieve enforceable exit mechanics.
At the same time, while the CCL now expressly contemplates drag along and tag along rights (and certain succession provisions), it does not expressly address other provisions that are typically included, such as put and call options or compulsory transfers on an event of default. Those concepts may therefore continue to be addressed contractually and remain a relevant factor in structuring and jurisdictional choice, particularly in more complex minority investment scenarios.
Finally, this does not eliminate execution risk. Even where the constitutional documents provide for drag or tag mechanics, onshore transfers remain subject to local authority processes, notarial execution, and procedural sequencing that may not always align neatly with contractual completion mechanics.
Continuity Based Reorganisations: Redomiciliation and Conversion
The Amendment’s recognition of continuity of legal personality through redomiciliation and streamlined conversion mechanics has clear implications for deal structuring, both pre and post completion. In broad terms, these reforms expand the range of continuity-based options available within the UAE, potentially reducing the need for entity substitution or disruptive asset transfers where a transaction requires repositioning, reorganization, or a change in corporate form.
Practical Implication
In an M&A context, these tools may be used:
From a risk allocation perspective, this introduces additional sequencing choices in share purchase agreements, including whether such steps are conditions precedent, post-completion covenants, or deferred integration actions. As with redomiciliation generally, the practical utility of these reforms may depend on implementing regulations and the approach regulators, free zone authorities, and counterparties take.
In Kind Capital Contributions as Consideration and Rollover Tools
The clarification and formalisation of rules governing in kind capital contributions also has implications for transaction mechanics. In kind contributions were not novel under the previous regime; however, the Amendment aims to strengthen the valuation and accountability framework (including through clearer valuation standards and liability considerations), which may increase confidence in using asset for share structures in transactions involving onshore companies.
Practical Implication
In appropriate cases, in kind contributions may support:
From an execution standpoint, the more structured valuation framework may also provide additional comfort to counterparties, minority shareholders, and lenders where equity is being issued for non-cash value. It might remain important, however, to align early on valuation methodology and timing, document contribution mechanics clearly, and allocate valuation and title risk appropriately in the transaction documents.
Private Joint Stock Companies and Expanded Liquidity Options
The Amendment permits private joint stock companies to offer securities via private placement on UAE markets, subject to applicable Capital Market Authority conditions.
Practical Implication
From an M&A perspective, private placements may:
This expands the range of exit and liquidity options available between purely private M&A and full public offerings, particularly for PE backed or founder-led businesses contemplating staged exits.