Abdullah Bin Touq
The New Legal Amendments Mark a Significant Turning Point, Demonstrating the Nation’s Commitment to Strengthening Business Resilience and Sustainability
Projected 5% Growth for the National Economy by 2025
15% Expected Increase in Business Registrations and Licensing in UAE Markets During the First Year of Implementing the Amendments
63% Rise in Total Number of Small and Medium Enterprises Owned by Emiratis Over the Past Five Years
15% Contribution of the UAE Tourism Sector to the Nation’s GDP in 2025, Estimated at AED 291 Billion
760,000 Companies Attracted to UAE Markets Since the Implementation of the Commercial Companies Law in 2021 Until the End of 2025
37,794 National and International Trademarks Registered Last Year
The Ministry of Economy and Tourism has presented the Federal Law Decree No. 20 of 2025, which amends certain provisions of the Federal Law Decree No. 32 of 2021 concerning commercial companies. The amendments comprise significant and proactive changes involving 15 articles, along with the introduction of a new provision that regulates and facilitates the transfer of company registration in the commercial register with relevant authorities.
During a media briefing, the ministry revealed that around 250,000 new companies are expected to enter the UAE market in 2025.
His Excellency Abdullah Bin Touq Al Marri, Minister of Economy and Tourism, highlighted during the briefing that the UAE is keen on adopting a long-term visionary approach to developing an advanced and entrepreneurial business environment for companies of all sizes and forms, in line with best practices. The country has focused on developing competitive economic legislation and policies, recognizing the essential role of this vital sector in boosting the national GDP, aligning with the goals of the “We are the UAE 2031” vision, which aims for the nation to become the global leader in developing proactive legislation for new economic sectors within the next decade.
He indicated that the new amendments to the commercial companies law represent a pivotal moment that reflects the country’s commitment to enhancing the flexibility and sustainability of companies, supporting their ability to keep pace with future trends. This initiative includes unprecedented legislative steps at both the national and regional levels, contributing to the competitiveness of the business environment and attracting investments.
He noted that these amendments will bring about a qualitative shift in alignment and integration between local legislation and regulations governing free zones and financial free zones concerning company establishment, operations, and transfers across different systems. This will reduce compliance costs, facilitate business operations, ensure continuity, and enhance companies’ ability to access markets and secure financing and investments efficiently. It will also boost investor confidence and business communities in the reputation of the national economy, solidifying the UAE’s position as a global business and investment hub, with an anticipated increase in the number of company registrations and licenses in UAE markets between 10% and 15% during the first year of applying the new legal amendments.
Statistics and Figures
He pointed out that the UAE markets have welcomed 760,000 companies since the introduction of the commercial companies law in September 2021 until the end of 2025, raising the total number of active companies in the country to over 1.4 million, reflecting a growth of 118.7%.
Furthermore, he stated that approximately 250,000 new companies will be established in 2025 alone, while small and medium-sized businesses owned by Emiratis have grown by 63% over the last five years.
He highlighted that 2025 will be a noteworthy year economically and touristic ally, marked by significant achievements including the registration of 37,794 national and international trademarks, with a 74% increase in registered trademarks over the past four years, indicating the vibrancy and attractiveness of the business environment for investments. In intellectual property, 3,595 intellectual property rights were registered, showing a remarkable cumulative growth of 124% over four years.
The UAE tourism sector has also demonstrated impressive performance, contributing 15% to the national GDP last year compared to 6% in 2021, amounting to a total value of AED 291 billion, reflecting exceptional growth of 216% over four years.
He anticipates that the UAE economy will achieve a growth rate of 5% by 2025, driven by the growing share of non-oil sectors, which contributed 77.5% of GDP by the end of the first half of last year.
The new amendments allow limited liability companies to maintain multiple share classes, positioning the UAE at the forefront of countries in the region that legalize this feature due to the importance of limited liability companies in the business and investment landscape. Moreover, shareholding companies are granted the option of multiple share types under specified organizational conditions.
It is worth mentioning that the classification of partner shares or types of shares will take various forms determined by a Cabinet decision, aligning with global regulations regarding different share categories.
Criteria and Requirements
The amendments introduced criteria and requirements for evaluating in-kind shares “capital in-kind” by a decision from the Ministry of Economy and Tourism, in coordination with the competent authority across all forms of companies except for public shareholding, where the regulation of this matter has been assigned to the Securities and Commodities Authority.
Any company may transition from one form to another while maintaining its legal identity in accordance with the provisions of this decree and the regulations governing company transformations issued by the Ministry of Economy and Tourism or the Securities and Commodities Authority, in coordination with the relevant authority. However, the legal amendments address challenges faced during the transformation into a public shareholding company, stipulating that the procedures concerning the transformation can commence without the need to submit a new establishment request or form an establishment committee, allowing the existing executive management to undertake the necessary powers and procedures to complete the transformation unless the general assembly decides otherwise.
Furthermore, the amendments have reduced the duration of the lock-up period on private shareholding company shares from two years to one year, with the possibility of ministerial approval to shorten this duration or grant exemptions. The private shareholding company is also exempt from the lock-up period when offering for private subscription and listing on financial markets, enabling greater flexibility for companies and enhancing their ability to attract financing and investments while creating new financial opportunities and instruments in the UAE’s financial markets.
The provisions of this decree apply to companies established in the UAE, foreign companies operating within the country, or those that have their management center and branches in the UAE, as well as branches or representative offices of companies established in free zones and financial free zones if they operate outside the free zone boundaries within the UAE.
Legal Forms
The decree specified five legal forms for companies: “Partnership,” “Limited Partnership,” “Limited Liability Company,” “Public Shareholding,” and “Private Shareholding.” It also introduced the concept of a “Non-Profit Commercial Company,” which reinvests its net profits generated from its economic activities into achieving its established goals without distributing these profits to the partners or shareholders. A decision will be issued by the Cabinet specifying the forms under which these companies can be registered from the five types and regulating the unique conditions and provisions for the non-profit commercial company, which may include special provisions differing from standard provisions applicable to similar company forms, achieving the objectives of non-profit commercial companies.
The non-profit commercial company is expected to contribute to supporting social impact projects in the country, as well as digital educational and health platforms, innovation, research, and development initiatives, among others.
The law mandates that a Cabinet decision will outline the purposes of these companies and regulate their provisions and forms, based on a proposal from the Minister of Economy and Tourism and in coordination with the Securities and Commodities Authority and the competent authority, granting the Cabinet the authority to exempt these companies from specific provisions of this law when necessary.
The amendments grant wide flexibility for companies to transfer their commercial register, allowing them to shift their registration headquarters and licensing scope from one emirate to another or between free zones and the UAE territory without the need for liquidation or re-establishment, preserving their legal identity, ongoing activities, and business history, along with the resulting rights and obligations.
Enhancing Investment Efficiency
The amendments allow free zone companies and financial free zones to operate within the UAE through branches or representative offices, thus enhancing the efficiency of existing investments and supporting their optimal benefit towards national economic growth.
The transfer of the commercial register will ensure the company maintains its legal identity without the need for liquidation or re-establishment, as was previously the practice, enabling companies to relocate between emirates and from free zones to the UAE territory and vice versa, under clear regulations, while ensuring continuity since the initial registration day—previously not permissible, as relocating the company was considered the birth of a new entity.
The transfer of company registrations in the commercial register with the competent authorities will occur upon meeting a series of conditions, including compatibility of registration systems, absence of any legal restrictions preventing the transfer, obtaining the necessary approvals from the relevant authorities, in addition to publishing the decision to transfer and aligning the company’s status as required.
Granting Nationality to Companies
The amendments clarified that both existing and newly established companies in the UAE, including in free zones and financial free zones, will retain their UAE nationality, strengthening the economic identity and reputation of the nation and enhancing the standing of national brands in accessing global opportunities and markets through the extensive international partnerships and robust economic presence of the UAE.
Additionally, provisions regarding forced sale and right of association have been included, allowing a majority partner or shareholder to compel minority partners to sell their shares upon the former’s decision to sell, while affording the minority the right to join the sale on the same terms, ensuring protection for all shareholders and facilitating a smooth transfer of ownership. This applies to both limited liability companies and shareholding companies with the necessary legal approvals.
The amendments also allow limited liability and private shareholding companies to include clauses in their founding contracts or constitutions that regulate the relationship between partners and shareholders, including pre-agreements to obligate certain partners or shareholders to sell their shares to a third party upon the fulfillment of specific conditions or enabling them to join an existing sale under the same agreed terms with the buyer.
Furthermore, the amendments established a mechanism for dealing with the shares or stocks of a deceased partner or shareholder, granting remaining partners or shareholders, or the company themselves, the priority to purchase them at an agreed value with the heirs. If no agreement is reached, a competent court will assess the value of the share or stock through specialized experts in financial and technical matters.
The amendments permit private shareholding companies to offer their financial instruments for private subscription in one of the nation’s financial markets, according to regulations and conditions issued by the Securities and Commodities Authority in coordination with the ministry and relevant entities.
Benefitting Companies
The primary beneficiaries of the amendments to the commercial companies law include companies established within the UAE wishing to transition to public or private shareholding status, companies operating in free zones and financial free zones when conducting activities within the UAE, startups, and entrepreneurs seeking private funding without a public offering, companies wishing to transfer their registration or expand geographically within the UAE without re-establishment, and investors and venture capital firms benefiting from structured share classes and voting rights.
Additionally, the amendments grant UAE nationality to every company established in the country, enhancing its international recognition and strengthening its reputation in global contracts and partnerships while empowering the national brand.
01 – Introduction of a new provision regulating and facilitating the transfer of commercial registration of companies among the relevant authorities in the country, including financial free zones, while maintaining their legal identity.
02 – Allowing limited liability companies the advantage of multiple share classes, and public shareholding companies the option of multiple types of shares under specified organizational regulations.
03 – Classification of shares or stocks based on their value, voting rights, profit shares, priority shares, preferred shares, nominal shares, or restricted shares.
04 – Definition of five legal forms for companies: “Partnership,” “Limited Partnership,” “Limited Liability Company,” “Public Shareholding,” and “Private Shareholding.”
05 – Granting extensive flexibility to companies in relocating their registration headquarters and licensing scope from one emirate to another or between free zones and within the UAE without liquidation or re-establishment.
06 – Allowing companies in free zones and financial free zones to conduct their activities inside the country through branches or representative offices, reinforcing the principle of economic integration.
07 – Continuation of existing companies, including those in free zones, to enjoy UAE nationality, thereby enhancing the nation’s economic reputation.
08 – Introduction of a non-profit commercial company type, wherein net profits are reinvested to achieve its objectives, supporting the establishment of social impact projects.
09 – Reducing the lock-up period on private shareholding company shares to one fiscal year instead of two years, with the possibility of shortening or granting exceptions to this period.
10 – Exempting private shareholding companies from the lock-up period when offering for private subscription and listing on financial markets.
11 – Introducing requirements for evaluating in-kind shares through ministerial decisions in coordination with the relevant authority for all types of companies except for public shareholding.
12 – Allowing any company to transition from one legal form to another while maintaining its legal identity according to the new law and regulations.