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The UAE has made significant changes to its business laws over the past few years, making it easier for foreign investors, including Indian entrepreneurs, to establish and expand companies in the country.
One of the most important reforms is the UAE Commercial Companies Law, officially known as Federal Decree-Law No. 32 of 2021. It came into effect on 2 January 2022, replacing the previous Commercial Companies Law of 2015.
The legislation introduced changes to company ownership, corporate governance, mergers, acquisitions, and public share offerings. Further amendments under Federal Decree-Law No. 20 of 2025 have made the framework more flexible for businesses and investors.
For Indian entrepreneurs planning to start a business in Dubai or expand an existing company into the UAE, understanding these regulations is essential.
This guide explains the UAE Companies Law, its latest amendments, ownership rules, compliance requirements, and what they mean for Indian business owners in 2026.
The UAE Commercial Companies Law is the federal legislation governing the establishment, management, restructuring, and dissolution of various types of commercial companies in the country.
Federal Decree-Law No. 32 of 2021 replaced Federal Law No. 2 of 2015 and introduced a more modern framework for business operations.
Its main objectives include:
The law applies primarily to companies established in the UAE mainland, with specific provisions covering foreign companies and certain free zone activities.
In 2025, the UAE introduced additional amendments to address evolving business needs, including shareholder rights, ownership arrangements, and company restructuring.
Federal Decree-Law No. 32 of 2021 became effective on 2 January 2022.
It replaced the previous Commercial Companies Law and introduced new requirements for businesses operating under the federal framework.
Existing companies were generally given a transitional period to align their constitutional documents and operations with the legislation.
That initial transition period has already passed. Businesses operating in 2026 should review their compliance against the law as amended, including the changes introduced under Federal Decree-Law No. 20 of 2025.
Companies may need to review their Memorandum of Association (MOA), Articles of Association (AOA), shareholder arrangements, and management procedures to reflect the requirements applicable to their legal structure.
The Commercial Companies Law establishes rules for several company structures.
These include:
| Company type | Main characteristics |
|---|---|
| Limited Liability Company (LLC) | Common structure for trading, commercial, and service businesses |
| Public Joint Stock Company (PJSC) | Suitable for larger enterprises seeking public investment |
| Private Joint Stock Company | Allows investment through privately held shares |
| Joint Liability Company | Partnership structure involving personal liability for partners |
| Simple Commandite Company | Partnership with different categories of partners and liability arrangements |
The framework also recognises special-purpose acquisition and investment arrangements subject to applicable regulations.
Free zone companies generally operate under the regulations of their respective free zone authorities.
However, the relationship between federal company law and free zone legislation has evolved.
The 2025 amendments clarify aspects of how companies established in free zones and financial free zones can operate outside those jurisdictions, including through appropriately authorised branches or representative offices.
This does not mean every free zone company automatically receives permission to trade throughout the mainland.
Indian entrepreneurs should review the requirements of their chosen free zone, the relevant mainland licensing authority, and any additional sector-specific regulators.
The original 2021 legislation introduced important reforms, while subsequent amendments have expanded the opportunities available to company owners.
One of the most significant developments in UAE company law is the ability of foreign investors to own 100% of many mainland businesses.
Previously, many mainland companies were required to have a UAE national holding at least 51% ownership.
Foreign ownership reforms introduced in 2020 and subsequently consolidated into the updated legal framework removed this requirement for many commercial activities.
As a result, Indian entrepreneurs can establish wholly foreign-owned mainland companies in numerous sectors.
However, certain strategic activities remain subject to specific ownership restrictions, approvals, and regulatory conditions.
For example, additional rules may apply to selected financial, defence, telecommunications, and other regulated activities.
What this means for Indians: An Indian entrepreneur planning to establish a trading, consultancy, or technology business may be eligible for full ownership, depending on the approved business activity and licensing jurisdiction.
An LLC in Dubai is one of the most commonly considered structures for entrepreneurs establishing mainland businesses.
The UAE Companies Law introduced changes intended to improve flexibility and governance.
Management structure
LLCs can appoint managers to oversee daily operations.
The law contains provisions addressing management vacancies and the continuation of management where appointments expire.
The 2025 amendments further clarify procedures for temporary management and filling vacant positions.
General assembly meetings
The legislation provides rules governing shareholder meetings, quorum requirements, voting, and meeting notices.
Electronic participation may be permitted in accordance with applicable legal requirements and the company’s constitutional documents.
Legal reserves
Under the 2021 framework, LLCs generally allocate 5% of annual net profits to a statutory reserve, subject to the law’s conditions.
Shareholders should also consider whether their MOA contains additional reserve or distribution provisions.
Shareholder rights
The legal framework provides for shareholder participation, voting rights, financial reporting, and other safeguards.
The latest amendments also support more flexible arrangements for ownership and shareholder exits.
Public Joint Stock Companies are generally suitable for larger businesses seeking substantial investment or access to public capital markets.
The Commercial Companies Law introduced changes relating to share capital, governance, and public offerings.
Important developments include:
Public offerings remain subject to applicable securities regulations and regulatory approvals.
For Indian investors considering major investments or acquisitions involving UAE public companies, these provisions influence financing and transaction planning.
The 2021 legislation introduced a framework supporting Special Purpose Acquisition Companies and Special Purpose Vehicles.
Special Purpose Acquisition Companies (SPACs) are entities established for acquiring or merging with another business, subject to the applicable regulatory framework.
Special Purpose Vehicles (SPVs) are commonly used to separate particular assets, investments, or liabilities within a defined structure.
These arrangements can be relevant for private equity, investment management, and corporate restructuring.
Their availability and permissible activities depend on the applicable authority and regulatory requirements.
Federal Decree-Law No. 20 of 2025 introduced further reforms to the Commercial Companies Law.
The UAE Ministry of Economy and Tourism reviewed the changes in a government announcement published on 6 January 2026.
The amendments are particularly relevant to businesses seeking investment, changing their ownership structure, or expanding across different UAE jurisdictions.
The amendments permit more flexible ownership arrangements by introducing the possibility of different classes of ownership interests in LLCs.
These classes may provide different economic or governance rights, subject to the applicable implementing rules and approvals.
For Indian startup founders, this can create opportunities to structure investments and shareholder rights more effectively.
For example, a business seeking external investors may be able to consider different arrangements for voting, profit distribution, or exit preferences, where legally permitted.
The availability and terms of particular classes must be assessed under the applicable regulations.
One of the notable reforms is the ability to transfer a company’s commercial registration between eligible jurisdictions without automatically requiring liquidation and re-incorporation.
Depending on the applicable legal procedures, such transfers may take place between emirates or between mainland and free zone jurisdictions.
The objective is to preserve the company’s legal identity and continuity while accommodating changes in its registered jurisdiction.
However, transfers remain subject to relevant regulatory approvals, registration requirements, and other legal conditions.
The amendments recognise mechanisms commonly known as drag-along and tag-along rights in certain company structures.
These provisions can help companies establish clearer exit arrangements.
For Indian entrepreneurs entering joint ventures or raising funds, shareholder agreements and constitutional documents should clearly address these rights where permitted.
The amendments also introduce changes affecting private joint-stock companies.
These include greater flexibility around private placements, share transfers, and access to investment opportunities.
The general restriction period affecting certain share transfers was reduced from two years to one year, subject to the applicable rules and possible exemptions.
This may make private joint-stock structures more attractive to companies seeking external investment.
Another development is the recognition of a framework for non-profit commercial companies.
These companies are intended to reinvest profits into achieving their stated objectives rather than distributing them to shareholders.
The practical conditions, eligible structures, and permitted activities depend on further implementing regulations.
This development may be relevant to entrepreneurs working on social-impact, education, healthcare, or research-focused initiatives.
For the official explanation, refer to the UAE Ministry of Economy and Tourism’s announcement on Commercial Companies Law amendments.
The Commercial Companies Law provides a legal framework for corporate restructuring, acquisitions, and public offerings.
The reforms support more flexible ways for businesses to raise capital and reorganise operations.
Companies may pursue mergers, acquisitions, or divisions in accordance with the relevant legal procedures and approvals.
The legislation addresses matters such as shareholder approvals, ownership changes, and the transfer of assets and obligations.
The law introduced changes allowing eligible businesses greater flexibility in moving towards public ownership.
Public offerings remain subject to the appropriate securities laws, disclosure requirements, and regulatory approvals.
The expanded framework gives companies more options to reorganise legal structures and ownership arrangements.
This may be particularly useful for Indian businesses establishing regional headquarters, attracting investment, or preparing for future expansion.
Corporate Social Responsibility (CSR) is another area addressed by the Commercial Companies Law.
The law provides a framework for eligible companies, including public joint-stock companies, to make social responsibility contributions subject to applicable requirements.
CSR initiatives may support environmental projects, education, community development, or other socially beneficial activities.
Companies should review the rules governing contributions, financial reporting, and shareholder approvals before implementing CSR programmes.
Businesses operating in the UAE should ensure that their legal structure and governance arrangements comply with the legislation and other applicable regulations.
Important considerations include:
Every business must obtain the relevant licence for its activities and jurisdiction.
Mainland companies generally obtain licences through the competent economic authority, while free zone companies follow their respective authority’s licensing requirements.
Companies should maintain constitutional documents appropriate to their legal structure.
These documents may define ownership percentages, management powers, voting arrangements, profit distribution, and share transfer conditions.
Companies must follow applicable rules concerning directors, managers, shareholder meetings, resolutions, and financial reporting.
Requirements vary by company type.
Businesses may need to maintain and update records relating to shareholders, beneficial owners, and authorised management personnel.
Additional financial reporting, audit, and disclosure obligations may apply.
The Commercial Companies Law does not replace UAE tax legislation.
Companies should separately assess their obligations under the corporate tax and VAT frameworks, including registration, accounting, and filing requirements.
Companies should monitor amendments affecting their business activities, sector approvals, employment arrangements, and licences.
Compliance should be reviewed whenever there are significant ownership, management, or operational changes.
Indian investors should evaluate more than company ownership rules before establishing a UAE business.
Important factors include:
The appropriate setup will depend on your business activity, target market, investment plans, and regulatory obligations.
Understanding the UAE Commercial Companies Law is an important part of establishing and managing a business in the country.
From ownership structures and company registration to governance requirements and licensing approvals, businesses must make decisions that support both regulatory compliance and long-term growth.
At Shuraa India, we assist Indian entrepreneurs and businesses exploring company formation in Dubai and other UAE jurisdictions.
Our services include guidance on business structures, company registration, licensing documentation, and coordination of relevant incorporation and PRO procedures.
Whether you’re establishing an LLC, expanding an Indian company into the UAE, or exploring mainland, free zone, or offshore options, our team can help you understand the available setup routes and their requirements.
Contact Shuraa India to discuss a UAE company formation structure that suits your business goals.
The UAE Commercial Companies Law is the federal legislation governing the formation, management, restructuring, and dissolution of several categories of commercial companies. Its main framework is Federal Decree-Law No. 32 of 2021, as amended.
Federal Decree-Law No. 32 of 2021 remains the principal Commercial Companies Law, with amendments including Federal Decree-Law No. 20 of 2025.
Yes. Indian nationals can own 100% of many mainland and free zone companies. However, certain strategic and regulated activities remain subject to additional ownership conditions or approvals.
Free zone companies generally follow their respective free zone regulations. Federal provisions can also become relevant, particularly where free zone businesses establish or operate authorised mainland branches or representative offices.
Key developments include more flexible share classes, registration transfers, shareholder exit mechanisms, private joint-stock company reforms, and a framework for non-profit commercial companies.
A UAE national shareholder is not mandatory for many mainland LLC activities. However, ownership restrictions and sector-specific approvals still apply to certain activities.
The amended framework allows eligible company-registration transfers between jurisdictions while preserving legal continuity, subject to regulatory conditions and approvals.
An LLC is commonly used for privately owned commercial businesses and generally offers a simpler ownership and management structure. A PJSC is designed for larger corporate operations and may raise capital from the public, subject to applicable securities regulation.
Yes. Indian residents making overseas investments may need to comply with applicable RBI, FEMA, overseas investment, and Indian taxation requirements, alongside UAE laws.
About the author
Ritish SharmaRitish Sharma is a professional writer and UAE business advisor with expertise in corporate regulations and company setup. He helps Indian entrepreneurs understand and navigate the UAE’s dynamic business landscape, simplifying complex legal and business concepts. With actionable insights and practical guidance, Ritish empowers Indian businesses to establish, grow, and succeed in the UAE market confidently.
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