UAE overhauls Companies Law in latest update to boost investment

The UAE has issued a new Federal Decree-Law introducing major amendments to the Commercial Companies Law, marking the latest step in a broader 2025 reform programme aimed at strengthening the country's position as a global business destination.

- Issac John

A view of the Dubai International Financial Centre and neighbouring areas. A key development is the regulation of how companies can relocate within the UAE or between onshore jurisdictions and financial free zones without losing their legal identity. - FILE PHOTO

(FILE PHOTO)

The new provisions modernise corporate structures, expand financing options, and create more flexible pathways for businesses operating across the UAE's diverse jurisdictions. Together, these changes are designed to increase competitiveness, support innovation and attract new investment across both commercial and social sectors.

One of the most notable updates is the formal introduction of the nonprofit company — an entirely new category within the UAE's business landscape. Unlike traditional companies, nonprofit entities must reinvest all net proceeds back into pursuing their stated objectives, rather than distributing earnings to shareholders or partners. By establishing this model in federal law, the UAE aims to provide a transparent and credible vehicle for social, cultural and developmental projects. It also opens the door for philanthropic organisations and mission-driven initiatives to operate with clearer governance and stronger legal protection.

The decree-law also expands how companies can structure their capital, allowing them to issue multiple classes of shares or stakes with different rights attached. These may include distinct voting rights, dividend priorities, redemption rules or liquidation preferences, as determined in the company's founding documents. This aligns the UAE more closely with international financial centres and supports businesses involved in private equity, venture capital, family enterprise structuring and corporate reorganisations. For investors, this flexibility means more tailored arrangements and better alignment between financial contribution and decision-making power.