Corporate Services Lawyers United Arab Emirates 2026: LLC Exit & Capital Rules

Corporate services lawyers in the United Arab Emirates face a defining compliance moment in 2026: Federal Decree‑Law No. 20 of 2025, which amends the Commercial Companies Law (Federal Decree‑Law No. 32 of 2021), has fundamentally reshaped onshore LLC exit mechanics, capital‑raising structures and re‑domiciliation pathways. Published on 10 December 2025 and effective from 1 January 2026, the amendments introduce multi‑class shares, statutory drag‑along and tag‑along rights, and a formal framework for in‑kind capital contributions, changes that demand immediate attention from boards, company secretaries and general counsel across the country. Alongside these corporate law reforms, Federal Decree‑Law No.

17 of 2025 on Tax Procedures and updated Federal Tax Authority (FTA) service fee schedules add a parallel layer of procedural compliance that corporate services teams must integrate into their 2026 workflows.

Immediate actions for boards and corporate services teams:

• Audit existing articles of association (AOA). Identify clauses that conflict with, or fail to leverage, the new statutory provisions on share classes, exit rights and capital contributions.
• Convene a shareholder resolution meeting. Approve AOA amendments required to adopt drag‑along/tag‑along mechanisms and multi‑class share structures before upcoming capital events.
• Update internal compliance calendars. Map FTA procedural deadlines, fee payments and filing obligations introduced or modified for the 2026 fiscal year.
• Engage qualified corporate services lawyers. Obtain jurisdiction‑specific advice on re‑domiciliation options between mainland and free zones where the new framework applies.

What Changed: Key Provisions of Commercial Companies Law No. 20 of 2025

Federal Decree‑Law No. 20 of 2025 amends multiple provisions of the Commercial Companies Law to modernise the UAE’s corporate framework and bring it closer to internationally recognised deal mechanics. The amendments target five areas of immediate practical significance for corporate services lawyers in the United Arab Emirates and the clients they advise.

The principal statutory changes are as follows:

• Multi‑class shares for LLCs. Onshore LLCs may now issue shares carrying different economic and voting rights, enabling founders and investors to negotiate bespoke governance and distribution structures previously available only in free‑zone entities.
• Statutory drag‑along and tag‑along rights. Amendments to the transfer provisions introduce a statutory basis for drag‑along and tag‑along mechanisms, allowing majority and minority shareholders respectively to enforce or participate in exit transactions on defined terms.
• In‑kind capital contributions. LLCs may accept non‑cash contributions to share capital, subject to independent valuation and auditor certification requirements set out in the amended law.
• Streamlined re‑domiciliation. A new statutory pathway permits companies to re‑domicile between mainland jurisdictions and free zones while preserving contracts, licences and legal obligations, eliminating the need for full dissolution and re‑incorporation.
• Enhanced transfer and registration procedures. Share transfer mechanics have been updated with clearer registration steps and notification requirements, designed to reduce delays and disputes in ownership transitions.

LLC Exit Rights UAE: Shareholder Transfers, Mechanics and Templates

The amendments to LLC exit rights in the UAE represent one of the most consequential shifts for transactional practice under the Commercial Companies Law. Before 2026, shareholder exits in onshore LLCs relied heavily on contractual side‑agreements and bespoke shareholders’ agreement provisions, mechanisms that lacked clear statutory enforcement pathways and were frequently challenged in disputes. Federal Decree‑Law No. 20 of 2025 changes this by embedding drag‑along and tag‑along mechanics directly into the statutory framework, giving both majority and minority shareholders greater certainty.

Under the prior regime, a majority shareholder wishing to sell the entire company had to negotiate unanimous consent or rely on contractual drag‑along provisions whose enforceability was sometimes uncertain. The new law permits AOAs to include drag‑along clauses that, once triggered by a qualifying sale threshold, compel remaining shareholders to transfer their shares on the same terms. Equally, minority shareholders now enjoy statutory protection through tag‑along provisions, enabling them to participate in a sale initiated by the majority at the same price and on the same conditions.

Tag‑Along and Drag‑Along: Practical Drafting

Industry observers expect that corporate services teams will need to draft or renegotiate exit clauses across their LLC portfolios. The following templates illustrate the core mechanics, they should be adapted to the specific facts and commercial terms of each transaction.

Sample drag‑along clause (template, adapt to facts):

“If one or more Majority Shareholders (holding in aggregate not less than [75]% of the issued share capital) receive and wish to accept a bona fide offer from a Third Party Purchaser for the acquisition of all issued shares, such Majority Shareholders may, by written notice to all remaining shareholders (the ‘Drag Notice’), require each remaining shareholder to transfer their shares to the Third Party Purchaser on the same price, terms and conditions as set out in the Drag Notice, subject to completion within [60] calendar days of the Drag Notice date.”

Sample tag‑along clause (template, adapt to facts):

“If any Shareholder (the ‘Selling Shareholder’) proposes to transfer shares representing [30]% or more of the issued share capital to a Third Party Purchaser, each remaining shareholder shall have the right, exercisable by written notice within [30] calendar days of receiving the Tag Notice, to require the Selling Shareholder to procure that the Third Party Purchaser acquires such remaining shareholder’s shares on the same price per share, terms and conditions offered to the Selling Shareholder.”

Transfer Registration and Valuation Considerations

Transfers must be registered in accordance with the updated registration procedures under Federal Decree‑Law No. 20 of 2025. The practical steps include executing a notarised share transfer agreement, updating the company’s commercial register entry and notifying the relevant licensing authority. Corporate services lawyers in the United Arab Emirates should ensure that internal governance manuals reflect these updated procedural requirements.

Valuation is often the most contentious aspect of any forced exit. The likely practical effect of the new provisions will be to increase reliance on independent valuation at the point of trigger. Recommended approaches include:

• Fair market value by independent valuer. The AOA should specify that an accredited independent valuer determines the price, with a defined appointment mechanism if the parties cannot agree.
• Formula‑based pricing. For less complex businesses, a pre‑agreed formula (e.g., multiple of audited EBITDA or net asset value) provides certainty and speed.
• Expert determination with escalation. A two‑tier mechanism, expert determination followed by arbitration if the gap exceeds a defined percentage, balances speed with fairness.

Capital Raising UAE 2026: Share Classes and In‑Kind Contributions

Federal Decree‑Law No. 20 of 2025 opens significant new structuring options for capital raising in the UAE during 2026 and beyond. The introduction of multi‑class shares for onshore LLCs and the formalisation of in‑kind capital contributions bring the mainland framework closer to the flexibility long enjoyed by entities established in ADGM and DIFC.

Multi‑Class Shares: Structuring Options

LLCs may now create distinct share classes with differentiated rights regarding voting, profit distribution, liquidation preferences and anti‑dilution protections. This is particularly relevant for venture capital and private equity transactions, where investors typically require preference shares with downside protection and liquidation priority.

A board seeking to adopt multi‑class shares should follow this checklist:

• Obtain a special resolution of existing shareholders approving the creation of new share classes.
• Draft and file amended AOA provisions that define each class, its rights and the circumstances under which conversion, redemption or reclassification may occur.
• Register the amended AOA with the relevant commercial registry and licensing authority.
• Issue updated share certificates reflecting the new class designations.

Sample AOA clause for multi‑class shares (template, adapt to facts):

“The share capital of the Company shall be divided into the following classes: (a) Class A Ordinary Shares, carrying [one] vote per share and equal rights to dividends declared by the shareholders; and (b) Class B Preference Shares, carrying [no/limited] voting rights, a [X]% cumulative preferred dividend and a liquidation preference equal to [1x] the original subscription price per share, payable in priority to distributions to holders of Class A Ordinary Shares.”

In‑Kind Capital: Valuation and Auditor Reports

The acceptance of in‑kind contributions, such as intellectual property, real estate, equipment or receivables, is now expressly permitted for onshore LLCs under the amended Commercial Companies Law. The law requires that each non‑cash contribution be independently valued and that the valuation be confirmed by an auditor’s report before the capital increase is registered.

The practical steps for corporate services teams handling in‑kind capital are:

• Engage an independent, accredited valuation professional to assess the fair market value of the contributed asset.
• Obtain an auditor’s report confirming that the valuation methodology is appropriate and the assigned value is reasonable.
• Pass a shareholder resolution approving the in‑kind contribution and the corresponding issuance of shares.
• File the auditor’s report and amended AOA with the commercial registry alongside the capital increase application.

Re‑Domiciliation UAE: Cross‑Border Restructuring Process and Pitfalls

One of the most transformative elements of Federal Decree‑Law No. 20 of 2025 is the introduction of a statutory re‑domiciliation mechanism that allows companies to migrate between mainland UAE and free zones, and vice versa, without dissolution and re‑incorporation. This addresses a long‑standing structural limitation that forced businesses to wind up in one jurisdiction and start afresh in another, losing contractual continuity, licence history and operational momentum in the process.

Under the new framework, a re‑domiciling company preserves its contracts, assets, liabilities and obligations. Early indications suggest that the process will require coordination between the originating and receiving licensing authorities, and that the specific procedural steps may vary depending on the free zone involved.

Pitfalls to anticipate include sector‑specific licensing requirements that may not transfer automatically, employee visa sponsorship transitions that require coordination with the General Directorate of Residency and Foreigners Affairs, and lease or tenancy obligations tied to the original jurisdiction. Corporate compliance in the UAE demands that each of these dependencies is mapped and resolved before the re‑domiciliation application is filed.

Tax and FTA Procedural Changes Affecting Corporate Services in 2026

Federal Decree‑Law No. 17 of 2025 on Tax Procedures introduced updates to the procedural framework governing tax registration, filing and compliance in the UAE. These changes run alongside the corporate law amendments and create additional compliance obligations for corporate services teams managing entity structures, capital changes and shareholder transitions.

The Federal Tax Authority has also updated its service fee schedule for 2026. Companies should verify current fees directly on the FTA official portal, as fee structures are subject to periodic revision by Cabinet decision.

Key areas where tax and corporate compliance intersect include:

• Tax registration updates following re‑domiciliation. A company that re‑domiciles must update its tax registration details with the FTA to reflect the new licence, jurisdiction and trade name (if changed).
• Capital structure changes and transfer pricing. The issuance of multi‑class shares or acceptance of in‑kind capital may affect related‑party transaction reporting and transfer pricing documentation requirements under the corporate tax framework.
• Shareholder exit and capital gains treatment. Corporate services lawyers in the United Arab Emirates should confirm whether exit proceeds trigger any corporate tax or withholding obligations, particularly where the exiting shareholder is a non‑resident or where the transaction involves a qualifying free zone entity.
• FTA filing deadlines. Updated procedural rules may introduce revised deadlines for tax return submissions, voluntary disclosure applications and penalty abatement requests. Teams should cross‑reference all deadlines against the company’s financial year‑end.

Corporate Compliance UAE: Board Actions Checklist for 2026

The following checklist consolidates the governance, filing and operational steps that company secretaries and corporate services teams should complete in 2026 to ensure full compliance with the amended Commercial Companies Law and related regulatory changes.

1. AOA review and gap analysis. Compare existing AOA provisions against the new statutory framework; identify required amendments for share classes, exit rights and capital contribution mechanisms.
2. Shareholder resolution. Convene a general meeting to approve AOA amendments by the requisite majority (typically special resolution for structural changes).
3. File amended AOA. Submit the updated AOA to the relevant commercial registry and licensing authority; retain notarised copies for the corporate records.
4. Update shareholders’ agreements. Align any separate shareholders’ agreements with the new AOA provisions and confirm that drag/tag mechanics are consistent across both documents.
5. Board minutes and governance manual. Record all board and shareholder decisions; update the corporate governance manual to reflect new transfer procedures, valuation processes and re‑domiciliation protocols.
6. Tax registration update. Notify the FTA of any changes to company details arising from re‑domiciliation, capital restructuring or change of shareholder.
7. Independent valuation (if applicable). Appoint a valuer for in‑kind contributions or exit‑price determination; obtain auditor certification before filing.
8. Licence and visa review. Confirm that all trade licences, establishment cards and employee visas remain valid and correctly attributed following any structural change.
9. Accounting and reporting. Ensure that new share classes and capital contributions are reflected in the company’s books and audited financial statements in accordance with IFRS as adopted in the UAE.
10. Compliance calendar update. Map all new deadlines, FTA filings, AOA filing deadlines, shareholder notification windows and re‑domiciliation milestones, into the corporate compliance calendar.

Risk Management: Disputes, Minority Protection and Enforcement

Even with the statutory clarity introduced by Federal Decree‑Law No. 20 of 2025, disputes over exit pricing, valuation methodology and the triggering of drag‑along or tag‑along provisions remain a realistic risk. Industry observers expect that the early years of enforcement will surface interpretive questions that have not yet been tested before the UAE courts.

Practical risk‑mitigation measures for corporate services lawyers in the United Arab Emirates include:

• Deadlock resolution clauses. Insert escalation mechanisms, mediation followed by binding arbitration (DIAC, ADCCAC or an international seat), to avoid protracted court proceedings.
• Pre‑agreed valuation methodology. Lock in the methodology and the identity (or at minimum the selection criteria) for the independent valuer at the time the AOA is drafted, not at the point of dispute.
• Minority protection thresholds. Define reserved matters that require supermajority or unanimous consent to prevent majority abuse, such as share issuances that dilute below a specified percentage, related‑party transactions above a defined value, or changes to the company’s principal activity.
• Sunset and review provisions. Include periodic review clauses to reassess valuation formulas and exit thresholds in light of the company’s evolving financial position, ensuring they remain commercially reasonable over time.

Next Steps for 2026 Compliance

The amendments introduced by Federal Decree‑Law No. 20 of 2025 are not optional adjustments, they redefine the statutory baseline for LLC governance, exit rights, capital raising and re‑domiciliation across the UAE. Companies that delay updating their governance documents risk operating under provisions that no longer reflect the law, creating exposure in future transactions, fundraisings and shareholder disputes.

The recommended next steps are straightforward: complete the AOA gap analysis, convene the necessary shareholder meetings, engage qualified corporate services counsel and synchronise tax and FTA compliance updates with any structural changes. For companies considering re‑domiciliation, initiating early dialogue with both the originating and receiving authorities will reduce timeline uncertainty.

Key Legislative and Compliance Dates

Conclusion

Federal Decree‑Law No. 20 of 2025 marks a decisive modernisation of the UAE’s corporate framework, equipping corporate services lawyers in the United Arab Emirates with statutory tools, multi‑class shares, codified exit rights, in‑kind capital and streamlined re‑domiciliation, that bring mainland LLCs materially closer to international best practice. Combined with the procedural and tax compliance updates introduced by Federal Decree‑Law No. 17 of 2025 and revised FTA fee schedules, the 2026 landscape demands prompt, structured action from every company secretary, CFO and general counsel operating in the jurisdiction.

This article is provided for general informational purposes only and does not constitute legal advice. The application of Federal Decree‑Law No. 20 of 2025 and related legislation will depend on the specific facts and circumstances of each case. Readers should seek qualified legal counsel before acting on any of the information contained herein. Last reviewed: 6 May 2026.

Sources

1. Norton Rose Fulbright, Key Amendments to the UAE Commercial Companies Law and Their Practical Impact
2. Federal Tax Authority (FTA), Official Portal
3. Reed Smith, UAE Commercial Companies Law: Key Changes and What They Mean for Business
4. Lexis Middle East, eJournal on Federal Decree‑Law No. 20 of 2025
5. Greenberg Traurig, UAE Commercial Companies Law Amendments: Practical Corporate Structuring and M&A Considerations
6. Global Law Experts, UAE LLC Share Transfer Rules 2026