Corp Law in the UAE: What You Actually Need to Know

Corp Law in the UAE: What You Actually Need to Know

If you're setting up, running, or restructuring a company in the UAE, "corp law" isn't one rulebook — it's several, depending on where your company sits. Mainland, free zone, or offshore each has its own regime. Getting the wrong one wrong is expensive.

Quick Answer

UAE corp law is governed primarily by Federal Decree-Law No. 32 of 2021 on Commercial Companies for mainland entities, plus separate regimes for each free zone (DIFC has DIFC Law No. 5 of 2018; ADGM has the Companies Regulations 2020). Since 2021, mainland LLCs can be 100% foreign-owned in most sectors. Corporate tax at 9% applies to profits above AED 375,000 from June 2023 onwards. Economic Substance and Ultimate Beneficial Owner (UBO) filings are mandatory. Which regime governs you depends entirely on where you incorporate.

Which Corp Law Applies to You?

Three layers. Mainland companies fall under the federal Commercial Companies Law (CCL), regulated by the Ministry of Economy and the emirate-level Department of Economic Development. Free zone companies follow their zone's own companies regulations — DIFC and ADGM run full common-law systems with independent courts, while zones like JAFZA, DMCC, and Meydan have civil-law-style rules issued by the zone authority.

Offshore entities (RAK ICC, JAFZA Offshore) exist mostly for holding structures. They can't trade onshore in the UAE.

Honestly, most people get this wrong on day one. They pick a free zone for the cheap trade licence, then discover they can't invoice UAE-based clients without a mainland branch or a distributor. Check your customer base before you pick the jurisdiction.

Ownership, Directors, and Share Capital

Federal Decree-Law No. 32 of 2021 scrapped the 51% Emirati ownership requirement for most mainland activities. Some strategic sectors — banking, insurance, certain security-adjacent businesses — still need local participation. The Cabinet publishes the list.

For a mainland LLC:

• Minimum one shareholder, maximum 50
• No statutory minimum share capital for most activities (but banks want to see something)
• At least one manager named in the memorandum
• No requirement for an Emirati manager anymore

DIFC and ADGM run closer to English company law. Private companies limited by shares, one director minimum, standard shareholder resolutions, statutory registers. If you've done a UK incorporation, you'll recognise 80% of the paperwork.

Get the memorandum of association right the first time. Amending it later means notarisation fees, DED approval, and — if you have foreign shareholders — attested passport copies all over again.

Corporate Tax, ESR and UBO Filings

Three compliance layers most founders underestimate.

Corporate Tax. Federal Decree-Law No. 47 of 2022 introduced a 9% corporate tax on taxable income above AED 375,000, effective for financial years starting on or after 1 June 2023. Free zone companies can still qualify for 0% on "qualifying income" if they meet substance and de minimis rules — but you must register with the Federal Tax Authority regardless, and file annually. Missing registration deadlines triggers an AED 10,000 penalty per Cabinet Decision No. 75 of 2023.

Economic Substance Regulations (ESR). Cabinet Resolution No. 57 of 2020 requires companies carrying on "relevant activities" (holding, IP, headquarters, distribution, finance, insurance, shipping, service centres, lease-finance) to file annual notifications and, where applicable, substance reports. Penalties for non-filing start at AED 20,000 and climb fast.

Ultimate Beneficial Owner. Cabinet Decision No. 58 of 2020 requires every UAE company (with narrow exceptions for wholly government-owned and certain financial free zone entities) to maintain and file a UBO register with the licensing authority. Update it within 15 days of any change.

Watch out: Corporate tax, ESR, and UBO are three separate filings with three different authorities and three different deadlines. One accountant handling all three is fine — one accountant assuming they're the same filing is a disaster.

Getting Out: Dissolution, Liquidation, Restructuring

Ending a company in the UAE takes longer than starting one. For a mainland LLC, expect 3-6 months minimum: shareholders' resolution, liquidator appointment, newspaper notice (two Arabic dailies, 45-day creditor window), clearance certificates from immigration, labour, utilities, banks, landlord, and Federal Tax Authority.

DIFC and ADGM offer solvent voluntary liquidation regimes that are cleaner and faster if the company has no debts. Insolvent liquidation goes through Federal Decree-Law No. 51 of 2023 (the new Bankruptcy Law), which replaced the 2016 regime and introduced preventive settlement procedures.

Mergers, share transfers, and re-domiciliation between free zones are all possible but paper-heavy. Budget six to eight weeks for anything involving a change of shareholder if foreign passports and attestation are in the chain.

For deeper reading on related areas, see our civil law category.

Sources

^[1] Federal Decree-Law No. 32 of 2021 on Commercial Companies — UAE Ministry of Justice. ^[2] Federal Decree-Law No. 47 of 2022 on the Taxation of Corporations and Businesses — Federal Tax Authority. ^[3] Cabinet Decision No. 75 of 2023 on Administrative Penalties (Corporate Tax) — FTA. ^[4] Cabinet Resolution No. 57 of 2020 on Economic Substance Requirements — Ministry of Finance. ^[5] Cabinet Decision No. 58 of 2020 on the Regulation of Real Beneficiary Procedures — Ministry of Economy. ^[6] DIFC Companies Law, DIFC Law No. 5 of 2018 — DIFC Legislative Database. ^[7] ADGM Companies Regulations 2020 — ADGM Registration Authority. ^[8] Federal Decree-Law No. 51 of 2023 on Financial Restructuring and Bankruptcy — UAE Ministry of Justice.

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