Federal Decree-Law No. 20 of 2025 took effect on 1 January 2026 and quietly rewrote several assumptions founders have been working with since 2020. If you formed a mainland LLC in the last three years, some of the constraints you designed around no longer exist.
Before this amendment, every share in a UAE LLC carried the same rights. That forced founders into awkward workarounds: side agreements, offshore holding layers, or free-zone structures just to give an investor a preference on dividends or a liquidation waterfall.
The new law lets LLCs issue different classes of shares with differentiated voting rights, dividend preferences, redemption mechanisms, and liquidation priority. Every class must be registered in the Commercial Register, which means the structure is on the record rather than buried in a side letter.
The UAE had foundations and associations, but the concept of a non-profit company where net profits are reinvested into the company's stated objectives rather than distributed to shareholders did not exist in the Commercial Companies Law. It does now.
If you are running a social enterprise, an industry body, or a research outfit, this removes the need to shoehorn the operation into a standard commercial entity or register offshore.
Sophisticated shareholder protections, including drag-along, tag-along, first-refusal, and succession mechanisms on death, can now be embedded directly in the company's constitutional documents. Previously, these clauses sat in shareholder agreements whose enforceability under UAE courts was debated case by case.
The amendment clarifies that free zone entities operating outside their zone boundaries are subject to the Commercial Companies Law for those external activities while remaining governed by zone regulations for in-zone operations. If you trade from DMCC but invoice a mainland client, the mainland rules apply to that transaction.
If you are raising capital, revisit your LLC structure. Multi-class shares may let you do onshore what previously required an offshore holding vehicle. If you are a social enterprise, explore the non-profit company form before renewing under a standard commercial license. And if you already have a shareholder agreement sitting outside your MOA, consider migrating those protections into the constitutional document where they carry statutory weight.
These are structural changes, not cosmetic ones. We help founders understand which amendments apply to their entity and how to implement them without disrupting existing operations. Talk to us if you want a review of your current setup against the 2026 law.
Tell us what you are setting up or renewing (trade license, visas, PRO, attestation, or drafting) and we will map the fastest compliant path.
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