Key Amendments to UAE Corporate & Business Law Effective 2026
The New Year brings new resolutions, along with new rules and regulations. In the business world, it is essential to track changes in relevant laws to ensure continued compliance. However, this needs continuous attention, not just at the year-end, as the laws and regulations are ever-evolving. The amendments to laws are not always meant to strengthen the rules; they are, in fact, in place to promote the overall business and economics of the whole region. In this blog, we provide a brief overview of the key amendments to UAE corporate and business law that will take effect in 2026. We strongly recommend attaining expert advice in this regard.
Overview of UAE Corporate Law Changes in 2026
Whenever there are changes to business laws, initially, there is very little information available. Therefore, it is critical for businesses to stay informed as the changes are in place.
The Federal Decree Law No. 20 of 2025 amends certain provisions of the Federal Decree Law No. 32 of 2021. Let’s highlight the key changes in the UAE corporate law.
- Allowing multiple classes of shares and equity interests
- Allowing the transfer of the company registration
- Regulating relations between partners and shareholders, including drag-along and tag-along rights
- Changing the approach to lock-up periods for private joint-stock companies
- Harmonization between local legislation and free zone laws
- Introducing standards for valuing in-kind contributions
- Legal transformation of companies
- Establishing branches and representative offices of free zone companies in the UAE
- Strengthening the granting of UAE nationality to companies
- Introducing the non-profit commercial company
- Regulating the disposition of shares of deceased partners or shareholders
- Private joint-stock companies to offer their securities through private placement in the UAE financial markets
Furthermore, there are other key changes in tax rules in 2026 concerning the Tax Procedures Law and VAT law. Read: Changes in Key Tax Rules from 2026.
What are the Changes Impacting Company Formation & Ownership?
As we have listed the UAE corporate law amendments above, some of these are specifically related to company formation and ownership. Let’s highlight some key amendments.
Introduction of Nonprofit Commercial Company
The new law introduces a form of nonprofit commercial company. Such an entity aims to reinvest its profits to achieve its founding objectives. However, it should not distribute its income to shareholders.
Multiple Classes of Shares & Equity Interests
The current amendment allows the classification of partners’ or company shares into different classes. This, in turn, makes the UAE one of the first in the region to allow multiple classes of shares in LLCs. Most jurisdictions restrict this classification to only public joint-stock companies.
Transfer of Company Registration
The amendments allow firms to transfer their company registration between different emirates, free zones, and financial free zones. In this way, entities will maintain their original legal personality, including the contracts and obligations, without liquidation and reestablishment.
Legal Transformation of Companies
The law now allows any company to transform from one legal form to another, retaining its legal personality. There will be no need to submit a new incorporation request or form a founders’ committee. This, in turn, ensures the firm’s legal identity continuity from the first day of registration. However, previously, changing a firm’s location or legal form required establishing a new company.
Impact on Mainland vs. Free Zone Companies
New UAE corporate law amendments impact both mainland and free zone companies. There is now more harmonization between the two.
Harmonization between Local Legislation and Free Zone Laws
The new changes align and integrate local legislations and the laws of free zones and financial free zones. This includes company formation, operation, and transfer between regulatory systems. As a result, there will be strengthened coordination between the licensing authorities in the UAE.
Establishment of Branches and Representative Offices of Free Zones in the UAE
The law allows free zones and financial free zones to conduct activities within the UAE through branches and representative offices. This, in turn, will enhance the efficacy of existing investments and increase the economic influence.
Granting of UAE Nationality to Companies
The new rules clarify that new and existing companies in the UAE will continue to enjoy UAE nationality. This includes free zone and financial free zone entities.
Penalties for Non-Compliance under Updated Laws
The amendments provided under Federal Decree Law No. 20 of 2025 do not provide the updated penalties at the moment. However, the current penalties will still be applicable and continue to apply until further regulations are made. Key compliance areas where penalties can apply are
- Failure to maintain accounting records as per requirements
- Governance breaches
- Related party violations
- AML non-compliance
- Other violations
Cabinet Decision No. 75 of 2023 details the administrative penalties concerning the corporate tax law. These penalties can result in up to AED 20,000 per violation and also vary depending on the outstanding value.
Summary
In the UAE, the aim of the authorities is not only to enforce the laws but also to promote ease of doing business and the overall economy. This amendment (Federal Decree Law No. 20 of 2025) is the best example. The changes now allow more flexibility and harmonization between various rules. For instance, transfer of company registration to another emirate is now doable without liquidating the company. Similarly, the legal transformation from one form to another is also doable without liquidation and the formation of a new entity. Furthermore, many other changes enhance overall ease of doing business, flexibility, and alignment.
Creative Zone Tax & Accounting (CZTA)
The amendments to corporate and business law in the UAE bring about flexibility and clarity for businesses. However, the applicability is not as simple as we say. Therefore, for detailed guidance and information, it is recommended to consult experts in the field. Our team, skilled in UAE laws, is always ready to provide prompt service suitable for every UAE business. Contact us now.
Frequently Asked Questions (FAQs)
1. Can an LLC in the UAE now classify shares of partners or shareholders into different classes?
Yes. The current amendment allows multiple classes of shares for limited liability companies in the UAE. Previously, it was limited to public joint-stock companies.
2. Is it now possible to transfer a company registration from one Emirate to another?
Yes, it is possible to transfer registration between different Emirates, including the free zones, without going into liquidation.
3. What is a nonprofit commercial company?
The law introduces a new form of a company: a nonprofit commercial company. Such an entity aims to reinvest its profits to achieve its founding objectives. However, it should not distribute its income to shareholders.
4. Can a business change its legal form without requesting a new incorporation?
The law now allows any company to transform from one legal form to another, retaining its legal personality. There will be no need to submit a new incorporation request or form a founders’ committee.
5. Should we apply these changes immediately?
The information available here cannot be used as tax advice. Therefore, we recommend you contact our specialized team for a tailored solution. Contact [email protected] or call 800CZTAX.
