UAE updates commercial companies law: The UAE has overhauled its commercial companies law with amendments introducing delocalization, share class flexibility, drag/tag provisions, and clearer treatment of freezone companies, state news agency Wam reports. The decree pushes the mainland framework closer to common law practice, easing cross-border structuring and giving companies more corporate and capital structuring tools, according to Al Tamimi & Co.

Freezone laws clarified: The commercial companies law now covers foreign companies in the UAE and units of freezone firms operating outside their zones, subjecting them to UAE companies law for mainland activity.

Re-domiciliation introduced: A new delocalization rule allows companies moving their place of incorporation — from a foreign jurisdiction into the Emirates, between the different emirates, between freezones, and between the mainland the freezones — to maintain their original legal entity upon re-domicilation. Approval requires a shareholder resolution and regulatory sign-off.

The amendments also allow the formation of nonprofit companies that reinvest earnings rather than distribute them to partners and stakeholders, with the cabinet set to issue activity and governance rules to formalize their structure.

Shareholder rights: Firms can now include drag-along and tag-along clauses in their memoranda of association. Succession mechanism can be agreed upon in advance, and remaining shareholders — or potentially the company itself — may buy shares. The updates apply standard M&A and succession mechanisms, and are set to reduce negotiation friction and improve continuity planning, Al Tamimi & Co writes.

Firms can also issue multiple share classes including preference, restricted, and tiered shares ranging from A to D, each affording a different level of rights to shareholders. This opens the door to use structures often used in venture financing and growth equity within mainland operations, Al Tamimi & Co said. The cabinet is set to clarify the technical rules.

In-kind contributions formalized: The updates also include standards and controls for in-kind share valuation and appraiser accreditation to boost transparency. Contributions must be valued by at least one person to be valid.

Private joint-stock firms can sell securities via private placement on UAE capital markets, under Securities and Commodities Authority regulation, but only public firms remain able to conduct public offerings. The update looks to support firms in the pre-listing phase and fills a long-standing gap in the capital-raising ladder before a firm goes public.

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