UAE Commercial Companies Law: A Governance Checklist for Founders

Which company law applies?

Federal Decree-Law No. 32 of 2021 on Commercial Companies is a central source for many UAE companies, but the applicable framework depends on the entity’s legal form and location. Special rules can apply to financial free zones and other free zone entities, regulated activities and certain company types. Do not assume that a rule for a mainland LLC applies unchanged to a DIFC or ADGM company.

Seven areas founders should review

1. Legal form and licence. Confirm the licensed activities, legal form, ownership details, registered address and renewal obligations. Make sure the actual business activity fits the licence.
2. Memorandum and articles. Check ownership, share capital, manager or board powers, how decisions are made, quorum and voting requirements, and the procedure for amendments.
3. Shareholder arrangements. Consider how transfers, new investment, dilution, pre-emption rights, reserved matters, deadlocks and exits are handled. A side agreement should not be assumed to override mandatory law or the company’s constitutional documents.
4. Manager and director authority. Ensure the people dealing with banks, customers, employees and regulators can prove the authority they need. Update resolutions and signature records when roles change.
5. Meetings and resolutions. Record decisions in the required form, including approvals for significant transactions, new shares, amendments, related party matters or changes in management where applicable.
6. Books, records and filings. Maintain company registers, accounting records, financial statements, licences, resolutions and regulator correspondence in an accessible and current format.
7. Ownership and regulatory information. Check the beneficial ownership, licensing, AML, sector regulatory and tax obligations that apply to the specific entity.

What can cause trouble between founders?

Disagreements often arise because the owners have different expectations about who can spend money, sign contracts, hire staff, issue new shares, sell the business or decide a strategy. If the documents do not explain how to resolve a deadlock, a routine disagreement can disrupt operations.

Before a dispute arises, review the shareholder agreement and constitutional documents together. Confirm whether transfer restrictions, call or put options, buyout procedures or reserved matters have been drafted in a way that is consistent with applicable law and can be used in practice.

How to approach a proposed corporate change

• Identify the change: ownership transfer, new investor, director or manager replacement, new activity, restructuring or constitutional amendment.
• Check which internal approvals and external consents are required.
• Prepare resolutions and transaction documents in the correct sequence.
• Update the licence, registers and authority records where required.
• Keep evidence of submission, approval and the date on which the change becomes effective.

Common questions

Can a shareholder agreement replace the company’s articles?

Not automatically. The legal effect of a shareholders’ agreement depends on its terms, parties and applicable law. It should be reviewed alongside the constitutional documents and mandatory company rules.

Can a manager bind the company to a contract?

Authority depends on the company’s legal form, constitutional documents, registered powers, resolutions and any applicable legal limitations. Verify signing authority for material transactions.

Do free zone companies use the same rules?

Not always. The relevant free zone may have its own companies regulations, forms and filing process. Identify the exact jurisdiction before using a template or checklist.

Disclaimer: Legal Compass UAE provides simplified legal information for awareness purposes only. This article is not legal advice on a particular matter and does not create a lawyer client relationship. The applicable law, procedure and outcome depend on the facts, jurisdiction and current legislation. Get advice on your circumstances before acting.