UAE – Updated LLC Framework Prompts Review of MOAs and Shareholder Arrangements

The UAE Commercial Companies Law amendments under Federal Decree-Law No. 20 of 2025 are now in force, modernizing the framework for mainland limited liability companies (LLCs).

The changes provide greater flexibility in share structuring, shareholder rights, and capital arrangements, while reinforcing the importance of up-to-date corporate documentation.

Regulatory Background

The amendments are designed to better reflect evolving market practices and more complex ownership structures. They enable companies to adopt more tailored approaches to governance, including clearer articulation of shareholder rights, transfer mechanisms, and capital contributions.

While existing Memoranda of Association (MOAs) remain legally valid, many may no longer align with current commercial expectations or adequately support more sophisticated ownership arrangements. This is particularly relevant for companies with complex structures – including those linked to Foundation By-laws or Trust Deeds – where misalignment between governing documents may create legal and commercial risk.

Applicability and Scope

The updated framework applies to all UAE Mainland LLCs.

Effective Date

The amendments came into force on the 1^st of October 2025.

Practical Considerations and Ongoing Obligations

Although there is no immediate requirement to amend existing MOAs, updates effectively become necessary when corporate changes occur, such as:

• Changes in shareholding or ownership structure
• Share transfers or capital adjustments
• Updates to business activities

In practice, companies should take a proactive approach to ensure their constitutional documents remain fit for purpose. Key considerations include:

• Whether the MOA clearly reflects the current shareholding structure and governance model
• Alignment between the MOA and any shareholder agreements or side arrangements
• Adequacy of provisions covering decision-making, transfer restrictions, and exit scenarios

Failure to update documentation may not create immediate non-compliance but can lead to challenges in areas such as investor negotiations, dispute resolution, or exit planning.

Risks of Inaction

Outdated or misaligned corporate documents can result in legal uncertainty and operational friction, particularly where multiple stakeholder arrangements exist. Ensuring consistency across all governance documents is therefore an important element of ongoing corporate maintenance.

How Mercator® by Citco (Mercator) Can Help

Mercator can assist with:

• Reviewing existing MOAs against the updated legal framework
• Drafting and implementing amendments aligned with current regulatory and commercial standards
• Supporting corporate changes to ensure documentation remains consistent and enforceable

For assistance, please contact mercator@citco.com