ABU DHABI - The UAE government has issued a Federal Decree-Law amending some provisions of the Law on Commercial Companies. This amendment aims to enhance competitiveness in the business environment and keep pace with global economic developments.

The amendment also seeks to develop companies’ legal framework in the UAE, provide broader options for investors and stakeholders, and modernise the legislation of ownership and financing, thereby strengthening the UAE's attractiveness as a leading investment destination.

The Decree-Law introduced a new concept, the non-profit company. This type of company reinvests its net profits in achieving its stated purpose without distributing them to partners or shareholders. This further enables social and developmental sectors to operate within a flexible and transparent institutional framework.

The Decree-Law has provided advanced capital structure options through multiple categories of shares and stakes. These options include rights such as voting, profit distribution, priority of redemption and liquidation, as defined in the articles of incorporation or bylaws. This represents a significant step forward in corporate governance and supports private capital investment.

In financing, the Decree-Law permits private joint-stock companies to offer their securities for private subscription on a national financial market, subject to regulations issued by the competent authorities. This opens a new financing option for companies without requiring them to convert into public joint-stock firms.

The Decree-Law also regulates the delocalisation of companies and the change of their registration between the seven emirates and financial free zones, while maintaining their legal personality. It establishes clear requirements and procedures for the process, which enhances the free movement of businesses, expands the scope of economic activities within the UAE, reduces commercial disputes, and protects the rights of minority shareholders.

The Decree-Law also approves a range of modern contractual mechanisms for managing shares and stocks, including tag-along and drag-along transactions, as well as regulating procedures for disposition in the event of the death of a partner or shareholder, thus strengthening the stability and continuity of companies.

The Decree-Law also emphasised the standards for valuing in-kind shares and accrediting appraisers according to precise controls that ensure transparency and fairness, and protect the partners’ and investors’ rights in capital.

This Decree-Law represents a strategic leap in the UAE’s ongoing efforts to modernize business legislation and provide a flexible and robust legal environment supportive of innovation and investment, and enhancing the competitiveness of the national economy regionally and globally.