UAE Companies Law 2025: Succession-Friendly Reforms for Family Businesses

The UAE recently announced Federal Decree-Law No. (20) of 2025 amending key provisions of Federal Decree-Law No. (32) of 2021 Concerning Commercial Companies (the UAE Commercial Companies Law). These amendments introduce several provisions that directly support succession planning and estate management, complementing the 2022 UAE Family Business Law.

Key Succession-Focused Updates:

• Drag-Along and Tag-Along Rights: Limited liability companies (LLCs) and private joint stock companies (Private JSCs) can now include drag-along and tag-along rights in their Articles of Association, ensuring that both minority shareholders and heirs are treated fairly during share transfers, thereby reducing potential succession disputes.
• Right of First Refusal on Death: The Articles of Association for LLCs and Private JSCs are now expressly permitted to include a right of first refusal for all remaining shareholders, or the company itself, in the event of a shareholder’s death. This allows control to remain within the family or with the designated successors, thereby supporting structured estate planning.
• Multiple Share Classes for LLCs: LLCs can issue different classes of shares with distinct voting and economic rights, allowing companies to structure share capital ensuring that heirs receive economic benefits without necessarily gaining managerial control. Note that all LLCs registered under the UAE Family Business Law were previously permitted to issue multiple share classes; however, this option has now been expanded to LLCs that are not subject to the UAE Family Business Law.

Other Notable Changes:

• Non-Profit Companies: Non-profit companies are now expressly permitted under the UAE Commercial Companies Law, enabling family foundations and estate-planning structures.
• UAE Nationality for Free Zone Companies (Art. 9.3): Companies established within the UAE’s free zones, including the DIFC and ADGM, are expressly deemed to hold UAE nationality, reducing uncertainty in cross-border structuring.

Family-owned companies can still register under the Family Business Law to avail its specific governance and succession benefits, whilst taking advantage of the new succession friendly provisions under the UAE Commercial Companies Law. This combination allows for bespoke and personalised estate planning, smoother intergenerational transfers of assets and creates legal certainty which results in minimising the risk of disputes arising within business families.

The amendments to the UAE Commercial Companies Law will take effect the day following their publication in the Official Gazette.

For guidance on structuring your Family’s Business Succession Plan under the amended UAE Commercial Companies Law and the Family Business Law, please contact Sunita Singh-Dalal, Head of Private Wealth & Family Offices.