UAE Companies Law 2025: Shareholder Contractual Freedom

Greater Contractual Freedom Under UAE Companies Law 2025: What It Means for Shareholders

A cornerstone of the UAE's new Commercial Companies Law (Federal Decree Law No. 20 of 2025) is a significant expansion of contractual freedom for shareholders. The law moves away from a rigid, one-size-fits-all approach to corporate governance and allows shareholders to create bespoke arrangements tailored to their specific needs. This guide explains what this new contractual freedom means for you and your business.

Related Services: Explore our Shareholders Agreement and Company Setup services for practical legal support in this area.

The Challenge: A Rigid Corporate Framework

Under the previous Commercial Companies Law, shareholders had limited ability to customize their corporate governance arrangements. The law prescribed a rigid framework for many aspects of corporate life, from the conduct of shareholder meetings to the rights and obligations of directors.

This could make it difficult for shareholders to create a governance structure that was truly fit for purpose, particularly in joint ventures and other complex business arrangements.

Related: Explore our legal consultation services for advice on your position in the UAE.

Related: Explore our Master Service Agreement drafting and negotiation services in the UAE.

Contractual Freedom Under the UAE Companies Law 2025

The new law addresses this issue by providing for much greater contractual freedom. Shareholders are now free to agree on their own rules for the governance of their company, as long as these rules do not contravene the mandatory provisions of the new law.

Related: Explore our business closure services in the UAE.

Key Areas of Enhanced Contractual Freedom

1. Bespoke Shareholder Agreements

The new law explicitly recognizes the validity of shareholder agreements and gives shareholders wide-ranging freedom to agree on their terms. Shareholders can now create a bespoke governance framework for their company that covers a wide range of issues, including:

Related: Explore our corporate governance advisory services in the UAE.

• Board Composition: The number of directors, the process for their appointment and removal, and the allocation of board seats between different shareholders.
• Decision-Making: The matters that require the approval of the board, a super-majority of the board, or the shareholders.
• Share Transfer Restrictions: Restrictions on the transfer of shares, such as rights of first refusal and tag-along and drag-along rights.
• Dividend Policy: The company's policy on the distribution of profits to shareholders.
• Deadlock Resolution: A mechanism for resolving any deadlock that may arise between the shareholders.

2. Flexible Memorandum and Articles of Association

The new law also provides for greater flexibility in drafting a company's memorandum and articles of association. Companies can now tailor their constitutional documents to their specific needs and circumstances, rather than being bound by a rigid, one-size-fits-all template.

3. Modern Governance Tools

The new law also embraces modern governance tools, such as virtual and hybrid shareholder meetings and electronic voting. These tools will give companies greater flexibility and make it easier for them to engage with their shareholders, particularly in a globalized business environment.

For professional legal guidance, explore our Shareholders Agreement and Corporate Governance Advisory service pages.

Conclusion: A More Empowered and Investor-Friendly Corporate Environment

The new contractual freedom under the UAE Commercial Companies Law is a major step towards a more empowered and investor-friendly corporate environment. It will give businesses greater flexibility, enhance the rights of shareholders and help attract new investment to the UAE.

All businesses in the UAE should review their corporate governance arrangements to ensure that they are taking full advantage of the new contractual freedoms.

At Nour Attorneys Law Firm, our corporate law specialists can advise on all aspects of the new UAE Commercial Companies Law. We can help you draft a bespoke shareholder agreement and tailor your company's constitutional documents to your specific needs. Contact us to create a corporate governance framework that is fit for the future.

Disclaimer: The information provided in this article is for general informational purposes only and does not constitute legal advice. Readers should seek professional legal advice tailored to their specific circumstances before making any decisions or taking any action based on the content of this article.

Nour Attorneys Team

Additional Resources

Explore more of our insights on related topics:

• GDPR Compliance for UAE Companies: Do You Need It?
• DLD Fee Financing Ban Dubai: What It Means for Property Buyers
• UAE's Removal from FATF Grey List: What It Means for Your Business
• Compliance Roadmap for UAE Companies Law 2025: Effective November 15, 2025