UAE Commercial Companies Law: 2025 Guide to the Most Progressive Corporate Legal Framework in the Region

The UAE Commercial Companies Law – A 2025 Legal Powerhouse for Investors and Entrepreneurs

Estimated reading time: 12 minutes

Key Takeaways

• 100% foreign ownership now possible in most onshore sectors, boosting FDI and market access.
• Introduction of SPACs and SPVs offers advanced corporate structuring tools.
• LLC reforms lower reserve requirements and enhance governance flexibility.
• Comprehensive UBO disclosure and robust audit rules raise corporate transparency.
• Corporate tax and compliance updates (2023–2025) align UAE with global best practices.

Introduction: A New Era for Business Under the UAE Commercial Companies Law

The UAE’s relentless drive to transform itself into a global commercial and financial powerhouse is most clearly reflected in its legislative reforms—anchored by the Federal Decree-Law No. 32 of 2021 on Commercial Companies (“UAE Commercial Companies Law”). As validated by ongoing regulatory confirmation, this law remains in effect and fully enforced as of September 2025, presenting businesses and entrepreneurs with unparalleled flexibility, liberalization, and opportunity (UAE Ministry of Economy).

Reinforced through a sequence of progressive amendments and new ministerial resolutions through 2025, the UAE Commercial Companies Law has not only modernized the regulatory landscape but has created remarkable pathways for both domestic and international participation in the UAE economy, offering clarity, security, and cutting-edge structures to meet the demands of a rapidly evolving global market.

1. 100% Foreign Ownership: The Emirates Open for Global Business

A seismic shift in the UAE corporate landscape—and arguably one of the most crucial reforms—is the removal of the historic restriction requiring UAE nationals to own a majority stake (51%) in onshore businesses. Today, foreign nationals are permitted to own 100% of shares in mainland (onshore) companies across almost all sectors. With this bold reform, the UAE stands out in the region for embracing full foreign direct investment (FDI) while keeping a vigilant check on certain strategic sectors.

Strategic Sector Exclusions

• Defense and military, banking and finance, insurance, and telecommunications remain subject to Cabinet Resolution No. 55 of 2021, retaining ownership limits and the requirement for Emirati participation. UAE’s official portal and Cabinet Decision No. 55 of 2021 set the framework and list of strategic activities/licensing controls.
• Other excluded sectors include currency printing, Hajj/Umrah services, Qur’an memorization centers, and fisheries-related services.

Practical Point: Investors must consult the up-to-date business activity lists published by the Department of Economy and Tourism (Dubai) and the Department of Economic Development (Abu Dhabi) to assess sectoral restrictions and confirm eligibility for 100% foreign ownership.

For details on company setup, see UAE company formation guide.

2. Corporate Forms Reimagined: SPACs and SPVs

The 2021 Law has definitively cemented the UAE’s position as an innovator by introducing highly sophisticated Special Purpose Acquisition Companies (SPACs) and Special Purpose Vehicles (SPVs) to its statutory regime.

• SPACs may now be established specifically to pursue acquisitions or mergers with other companies, facilitating the raising of capital for subsequent listings or deals.
• SPVs empower multinationals and local conglomerates to manage financing, risk isolation, and asset transfers more efficiently—tools essential for complex cross-border transactions and investment platforms.
• SPACs and SPVs are expressly recognized in FDL 32/2021 and regulated by the ESCA (Emirates Securities and Commodities Authority); SPVs are also widely used in ADGM/DIFC.

These developments align the UAE with the best practices of international financial hubs, catering especially to sophisticated investors, venture capitalists, and companies focusing on structural agility and investment-grade risk management.

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3. LLC Reforms: Flexibility and Financial Efficiency

The centerpiece of the Emirates’ corporate law—the Limited Liability Company (LLC)—has been further optimized by several investor-centric provisions:

• Statutory Reserves: The mandatory annual reserve has been slashed from 10% to just 5% of net profits, significantly increasing retained funds available for reinvestment in core operations or expansion.
• General Assembly Meetings: The notice period has been set at a minimum of 21 days, promoting better internal governance and management transparency.
• Supervisory Board Requirement: When an LLC’s shareholder count exceeds fifteen, the appointment of a Supervisory Board comprising at least three shareholders is now compulsory (Shuraa), amplifying oversight while scaling operations.
• Continuity of Management: Security and predictability are further enhanced by provisions that allow the board of managers to continue operating for up to six months beyond the end of their term if there is a delay in appointing successors.

4. Founders and Boards: Opening the Doors to Global Talent and Investment

The revised Commercial Companies Law has broken several barriers regarding initial shareholding and corporate leadership:

• No Minimum or Maximum for Founder Contributions: The arbitrary ceilings on founders’ stakes during public offerings are eliminated, enabling more flexible capital raising and investment structures (UAE Ministry of Economy).
• Nationality Restrictions Removed: Crucially, the law now imposes no nationality requirements for board members in public companies, eradicating a major roadblock for multi-national boards and the importation of global expertise (UAE Ministry of Economy).

These reforms are pivotal in making UAE corporations more competitive in international financial markets and major stock exchange integrations.

5. Corporate Restructuring and Family Businesses: Modernizing Succession and Cross-Border Integration

Family businesses, a backbone of the GCC economy, gain renewed support through Federal Decree-Law No. 37 of 2022. It governs structures related to succession planning and provides foreign-established company branches the pathway to become UAE-registered commercial companies, thereby laying a foundation for smoother intergenerational transitions and cross-border mergers.

6. Ultimate Beneficial Owner (UBO) Disclosure: The Vanguard of Transparency

Transparency and Anti-Money laundering efforts have become paramount globally. The UAE is no exception, mandating all companies to maintain an accurate Ultimate Beneficial Owner (UBO) register. The operative framework today is Cabinet Decision No. 109 of 2023 (Real Beneficiary Procedures) with penalties under Cabinet Decision No. 132 of 2023. The 25% threshold remains a core test. Any natural person who directly or indirectly holds 25% or more of a company, or exerts control by any other means, qualifies as a UBO.

The register must be regularly updated and submitted to authorities, ensuring that the economy operates with a high level of accountability and regulatory insight—critical for international investors and local compliance departments alike.

7. Compliance, Auditing, and Annual Filing: Raising the Governance Bar

The UAE Corporate Companies Law prescribes robust compliance obligations:

• LLCs and Joint Stock Companies: must draft annual financial statements and secure shareholder approval.
• Audited Accounts: Joint stock companies are required to file audited statements with the Securities and Commodities Authority (SCA) and Ministry of Economy.
• LLC Audited Financials: Some Emirates, including Dubai, make it compulsory for LLCs to submit audited financials through local Department of Economic Development (DED) portals. LLCs must appoint an auditor; submission of audited Financial Statements is required for Corporate Tax (as per Ministerial Decision 84/2025) above thresholds and is mandated by many free zones for license renewal; mainland Departments of Economic Development may request audited figures on a case-by-case or activity basis.

This structured approach ensures that the highest standards of corporate accountability are enforced, bringing the UAE in line with—and often surpassing—standards in major international jurisdictions.

8. Share Transfers in Private Joint Stock Companies: Unprecedented Flexibility (2025 Update)

A 2025 legal breakthrough is seen in Ministerial Decision No. 50 of 2025, which has notably reduced the statutory lock-up period for share transfers in private joint stock companies listed on UAE markets. The new approach introduces flexibility for secondary trading and enhances liquidity for investors (UAE Ministry of Economy).

9. Procedural Rigor: Changes in Company Data and Corporate Governance

The organizational architecture of every registered company in the UAE is kept under continuous regulatory scrutiny. Any changes to the memorandum/articles of association, management structure, or shareholding require notarization and must be filed for approval with the appropriate authority (DED or free zone authority). In fact Amendments must be recorded with the Competent Authority and the Commercial Register under Federal Decree Law No. 37/2021 and its implementing regulation. This measure ensures that the corporate registry is current, accurate, and reliable for both internal governance and third-party stakeholders.

10. Corporate Tax and Compliance Updates: 2023–2025 Landscape

Introduction of the Federal Corporate Tax Law

The landscape of corporate tax regulation in the UAE has been recalibrated by the Federal Corporate Tax Law, rolled out in 2023 and progressively refined through 2024 and 2025.

• Free Zone Companies: Businesses operating within UAE’s free zones can continue enjoying favorable tax regimes but must comply with stringent substance and reporting requirements.
• Transfer Pricing: For companies (including LLCs, JSCs, and holding structures) with revenue exceeding AED 200 million per year (or if you are part of an Multinational Enterprise group meeting specified criteria), as per Ministerial Decision No.97/2023, proper transfer pricing documentation has become mandatory.
• Group Relief and Consolidation: Provided group requirements are met, corporations can now avail themselves of tax group relief and consolidated filings—streamlining group taxation and improving organizational efficiency.
• Taxation of Digital Services and Economic Substance: Recognizing the importance of technology and online platforms, new detailed rules have been crafted for taxing digital services and ensuring these companies meet economic substance tests.

Annual License Renewal: Vital for All

Renewal of commercial and trade licenses remains an annual, non-negotiable core compliance activity for every UAE entity—mainland, free zone, or offshore—with a concurrent obligation to report any material change in corporate data to regulators.

11. Remaining Foreign Ownership Restrictions: Navigating Strategic Sectors (As of 2025)

Despite the ultra-liberal majority framework, foreign ownership restrictions persist in limited and sensitive sectors, including:

• Defense/military and security
• Banking, finance, and insurance
• Currency printing
• Telecommunications
• Hajj/Umrah service provision and Qur’an memorization centers
• Fisheries-related services

Due diligence on specific business activities and licensing is indispensable for enterprises aiming to enter these fields.

12. Practical Compliance Actions for 2025 and Beyond

To remain fully compliant and leverage the UAE commercial law environment, experts recommend the following:

• Check Business Activity Lists: Consult sector-specific business activity lists published by the Department of Economy and Tourism (Dubai) or Department of Economic Development (Abu Dhabi) for up-to-date insights on foreign ownership eligibility.
• UBO and Substance Compliance: Sustain rigorous Ultimate Beneficial Owner and economic substance reporting to avoid penalties and regulatory scrutiny.
• Transfer Pricing and Tax Adherence: Multinationals and group companies must ensure all transfer pricing policies, documentation, and tax returns align with the newly enforced corporate tax regime.

13. Law Status as of September 2025: The Living Body of UAE Corporate Law

• Federal Decree-Law No. 32 of 2021 on Commercial Companies continues as the principal and currently enforced legislative authority for corporate life in the Emirates (UAE Ministry of Economy).
• Recent legal amendments and ministerial enactments have neither repealed nor replaced this bedrock, but have instead enhanced, clarified, and extended its reach—especially notable in foreign ownership, compliance, and digital sector provisions.
• Stakeholders are advised to monitor the UAE Ministry of Economy & Tourism official site for periodic amendments and regulatory notices, as authorities are proactive in issuing clarifications and implementing best-practice global standards (UAE Ministry of Economy).

Conclusion: UAE Commercial Companies Law – The Gold Standard for the Region

The 2025 update to the UAE Commercial Companies Law highlights the Emirates’ spectacular evolution into perhaps the most open and investor-friendly business regime in the MENA region. By combining 100% foreign ownership, modern corporate forms (such as SPACs and SPVs), best-in-class compliance rules, robust transparency via UBO disclosure, and a pragmatic corporate tax framework, the nation has set a standard for both established multinationals and emerging startups.

This forward-thinking regulatory design—the UAE’s statutory “living law”—ensures that the jurisdiction not only accommodates local market specifics but also constantly anticipates the needs of global commerce and modern capital flows. Business leaders and legal professionals should see these changes not only as compliance mandates, but as a decisive invitation to embrace innovation, transparency, and strategic agility in one of the world’s most promising economies.

For ongoing updates, always refer directly to the UAE Ministry of Economy, and engage with experienced legal professionals to navigate the continuously evolving and sophisticated commercial law environment of the UAE.

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FAQs

What is the UAE Commercial Companies Law?

It is the Federal Decree-Law No. 32 of 2021, which forms the core legal framework governing the incorporation, operation, and governance of commercial companies in the UAE as of 2025.

Can foreigners own 100% of onshore companies in the UAE?

Yes, foreign nationals can now own 100% of shares in mainland companies across most sectors, subject to specific strategic sector restrictions.

What are SPACs and SPVs under the new law?

SPACs (Special Purpose Acquisition Companies) are entities established to raise capital for mergers or acquisitions, while SPVs (Special Purpose Vehicles) are structured to isolate risk and manage assets for cross-border transactions.

Is UBO disclosure mandatory for all companies?

Absolutely. All UAE-registered entities must maintain and update a register of their Ultimate Beneficial Owners to comply with Anti-Money laundering regulations.

When did the new corporate tax regime take effect?

The federal Corporate Tax Law was introduced in 2023 and has been refined through 2025, with key compliance deadlines and filing requirements now in force.