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Updated UAE Commercial Companies Law to reshape governance for family businesses
New amendments to the UAE’s Commercial Companies Law aim to modernise governance, ease succession and capital planning, and strengthen protections for family-owned businesses and SMEs
- PUBLISHED: Sun 26 Apr 2026, 8:33 PM
The UAE’s push to make doing business easier and more resilient continues with sweeping updates to its Commercial Companies Law, a move that legal and financial experts say could significantly reshape how companies — especially family-owned businesses — operate and plan for the future.
Recent amendments introduced under Federal Decree Law No. 20 of 2025 came into force on November 15 last year, updating the UAE Commercial Companies Law of 2021. The changes are widely seen as another step in modernising the country’s corporate framework, strengthening governance standards and helping businesses navigate succession, capital raising and shareholder disputes more smoothly.
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“These reforms align with the needs of modern enterprises, particularly family-owned businesses, operating in an increasingly complex economic and geopolitical environment. Implementing regulations in respect of the Amended Companies Law are expected soon,” said Naji Hawayek, Partner – Corporate at Addleshaw Goddard.
Family businesses sit at the heart of the UAE economy, and policymakers have paid particular attention to their long-term stability. Alongside the updated Companies Law, a separate Family Business Law introduced in 2022 remains in place, offering a tailored legal structure focused on succession planning, ownership continuity and internal governance within family-run firms.
Taken together, the two laws form a layered system. The Companies Law sets out the framework that applies to all commercial entities, covering how companies are run day to day. The Family Business Law, meanwhile, focuses more narrowly on preserving family ownership and avoiding disputes as control passes from one generation to the next.
Experts often describe this distinction as the difference between “above the line” decisions — such as who owns the business and who controls it — and “below the line” matters, which relate to operations and execution. The amended Companies Law strengthens both areas, while the Family Business Law concentrates mainly on ownership and succession issues.
One of the most talked-about changes is the introduction of multiple share classes. This allows businesses to separate economic ownership from voting control, making it easier for founders or families to gradually pass on wealth without losing strategic control too early. Other amendments formally recognise legal tools such as drag-along and tag-along rights, which help shareholders exit a business in an orderly way while protecting minority investors.
The law also allows companies to set out clear rules in their constitutional documents on how shares are transferred when a shareholder dies, reducing uncertainty and the risk of disputes. New provisions addressing shareholder deadlock aim to prevent companies from grinding to a halt by allowing independent decision-makers to step in when disagreements threaten operations.
“The Amended Companies Law and the Family Business Law together create a dual-layer governance framework that supports both business resilience and long-term generational continuity. These positive introductions to UAE legislation are particularly important and useful to family businesses in challenging times,” said Ghalya Rashid, Counsel – Corporate at Addleshaw Goddard.
Beyond family firms, the amendments broaden the UAE’s appeal as a place to set up and grow a business. The updated framework allows greater flexibility in capital structuring, formally recognises non-profit entities, enables companies to redomicile within the UAE, and strengthens shareholder protections.
“They also provide for redomiciliation within the UAE, formal recognition of non-profit entities, and a stronger framework for shareholder rights and governance. In addition, the law enables companies to embed more structured mechanisms within their constitutional documents to address ownership transitions and decision-making challenges,” said Rohit Maheshwari, Partner – M&A at Deloitte Middle East.
While the direction of travel is clear, some elements of the reform package still depend on implementing regulations that have yet to be issued. As a result, adoption remains limited for now, with many companies waiting for greater regulatory clarity before making changes to their structures or documentation.
Still, advisers say the long-term impact could be significant, particularly for small and medium-sized enterprises and family-owned businesses that have traditionally favoured free zones such as DIFC or ADGM.
“We are still in the early stages of implementation, but the direction of travel is unambiguously positive. Over time, UAE onshore may emerge as a practical alternative to DIFC and ADGM particularly for SMEs and family-owned businesses, where international investors and larger corporates have historically preferred free zone jurisdictions,” said Paul Leggett, Partner and Restructuring, Turnaround & Cost Transformation Leader at Deloitte Middle East.
Cheryln Samaniego, Partner – Business Process Solutions at Deloitte Middle East, said: "The amendment to the UAE Commercial Companies Law, as instituted by Federal Decree-Law No. 20 of 2025, signifies a substantial enhancement of the UAE's regulatory framework. This reform aligns with international standards, fostering greater flexibility and corporate mobility. It effectively supports corporate resilience and adaptability in the face of business disruptions."
Looking ahead, the ability to design flexible ownership structures, raise capital through private placements and put clearer governance rules in place could help businesses balance growth ambitions with long-term control. As companies become more comfortable using the new tools, experts expect the reforms to play a growing role in supporting resilience and sustainability across the UAE’s corporate sector.
“Together, these changes under the 2025 amendment lay the foundation for improving business resilience, enhancing corporate flexibility, enabling more sophisticated deal structuring, and supporting better access to capital,” said Scott Whalan, Deloitte Private Leader, Middle East.
Associate Editor Somshankar Bandyopadhyay brings more than three decades of experience to the KT newsroom. Currently, he manages the news production of the business section, ensuring that the top economic and business news of the day reaches its readers.