Corporate Governance in the UAE

Overview

Corporate governance in the UAE is no longer simply a compliance exercise. Recent reforms emphasize transparent ownership arrangements, effective management oversight, shareholder protection and business continuity.

Federal Decree Law No. 20 of 2025 amended Federal Decree Law No. 32 of 2021 on Commercial Companies with effect from 15 November 2025. The amendments introduced structuring options and governance mechanisms relevant to mainland companies, family enterprises, founders and investors.

The current governance framework

Governance requirements vary according to a company’s legal form, jurisdiction and regulated activities. Mainland companies are principally governed by the Commercial Companies Law, as amended. Public joint stock companies are additionally subject to the Governance Guide approved by Authority Board Chairman’s Decision No. 3/Chairman of 2020, as amended.

The federal securities regulator is now the Capital Market Authority, which replaced the Securities and Commodities Authority under Federal Decree Law No. 32 of 2025 from 1 January 2026.

DIFC and ADGM companies follow their respective regimes, while regulated entities may face additional sector specific requirements.

Governance cannot therefore be addressed through one template. Each business must identify the requirements applicable to its structure and activities and translate them into policies, reporting lines and approval procedures.

The 2025 commercial companies law amendments

The amendments allow limited liability companies to establish different classes of quotas and joint stock companies to issue different classes of shares, subject to applicable conditions. Because voting, dividend, transfer and liquidation rights may differ, those rights should be clearly recorded in the company’s constitutional documents.

The amendments also recognize “drag along” and “tag along” rights for limited liability companies and private joint stock companies, subject to legal requirements. These mechanisms can facilitate an orderly sale. Their effectiveness depends on clear drafting and consistency between the constitutional documents and any shareholders’ agreement.

The reforms also address management vacancies in limited liability companies. Where a manager’s or board of managers’ term expires without a replacement, existing management may continue temporarily for up to six months. Companies should maintain succession plans and monitor appointment terms rather than rely on this statutory fallback.

Requirements for listed companies

The Governance Guide contains detailed rules on board composition, independence, committees, conflicts of interest, related party transactions, disclosure and shareholder participation.

Decision No. 24/Chairman of 2025, effective from 30 August 2025, introduced conditions for combining the roles of board chair and chief executive officer. The articles of association must permit the combination, at least three quarters of the board must be independent, all standing committee members must be independent, and the general assembly must approve the arrangement by special resolution.

Listed companies must also comply with requirements concerning female board representation, governance reporting, board nominations, shareholder communications and general assemblies. Related party transactions exceeding 5% of issued share capital require enhanced valuation and approval procedures, and the related party must not vote on the relevant resolution.

Climate related governance

Federal Decree Law No. 11 of 2024 on the Reduction of Climate Change Effects entered into force on 30 May 2025. It applies to emissions sources in the UAE, including free zones, and establishes requirements concerning emissions reduction, measurement, reporting and verification.

Businesses should assign responsibility for climate data, regulatory reporting and environmental risk. Depending on their size and activities, this may require designated management responsibility, regular board reporting and integration of climate matters into the risk and compliance framework.

From compliance to business value

Strong governance improves decision making by establishing clear authority, escalation channels and accountability. It can also support investment and financing by giving investors and lenders confidence in the company’s ownership records, financial information and internal controls.

Governance is particularly important for family owned and founder led businesses. Documented succession arrangements, reserved matters and delegated authority can reduce disruption when ownership or management changes.

Practical next steps

UAE businesses should review their constitutional documents, shareholders’ agreements, share or quota rights, management appointments, delegations of authority and related party transaction procedures. They should also confirm that board and shareholder decisions are properly approved and recorded.

Governance arrangements should be reconsidered whenever a company admits an investor, creates a share class, changes senior management, expands into another jurisdiction, undertakes regulated activities or prepares for financing, sale or listing.