The Strategic Guide to Corporate Governance Framework in the UAE
Corporate governance in the UAE demands a precise and structured approach, reflecting the region’s evolving legal and economic environment. As the UAE continues to position itself as a global business hub, de
Corporate governance in the UAE demands a precise and structured approach, reflecting the region’s evolving legal and economic environment. As the UAE continues to position itself as a global business hub, de
Reviewed by Mohamed Noureldin, Founder, Managing Partner & Senior Legal Consultant
There is no single corporate governance code in the UAE. What applies to your company depends on where it is incorporated, what it does, and whether its shares are traded. A private mainland trading company, a listed joint stock company, a licensed insurer and a DIFC holding company are all subject to governance rules, but not the same ones, and confusing them produces board papers that satisfy nobody.
This guide sets out which rulebook governs which entity, what each of them actually asks a board to do, and where the practical failures happen.
Which rules apply to you
| Entity | Primary governance source | Supervised by |
|---|---|---|
| Mainland LLC or private joint stock company | Federal Decree-Law No. 32 of 2021 on Commercial Companies, plus the memorandum and articles | The emirate's licensing authority; Ministry of Economy |
| Public joint stock company with listed shares | The Commercial Companies Law plus the governance rules issued for listed companies | Securities and Commodities Authority; the market of listing |
| Bank, finance company, exchange house, insurer | Sector governance and internal control regulations | Central Bank of the UAE |
| DIFC company | DIFC Companies Law and regulations; additional conduct and systems rules if financially regulated | DIFC Registrar of Companies; DFSA for regulated firms |
| ADGM company | ADGM Companies Regulations; additional rules if financially regulated | ADGM Registration Authority; FSRA for regulated firms |
| Other free zone entity | The companies regulations of that free zone, alongside federal law of general application | The free zone authority |
Federal Decree-Law No. 32 of 2021 replaced Federal Law No. 2 of 2015 as the Commercial Companies Law, and it is the reference point for mainland companies. Separately, Federal Decree-Law No. 26 of 2020 removed the requirement for 51% ownership by UAE nationals in mainland companies, so foreign investors can now hold the whole of most mainland businesses, subject to a list of activities of strategic impact. That change matters to governance because it removed the layer of nominee and side-letter arrangements that many older structures depended on. Companies still running on those documents should replace them rather than leave two inconsistent versions of the ownership on file.
Related: Our Corporate Governance Framework in | Nour Attorneys work covers exactly this exercise.
What the Commercial Companies Law asks of a board
Reduced to essentials, the mainland regime asks four things.
Loyalty and care. A manager or director owes duties to the company itself, not to the shareholder who nominated them. Acting on instructions from a shareholder, in a matter where the company's interest points the other way, is where personal exposure begins.
Declared conflicts. A director with an interest in a matter must declare it and stand back from the decision. This is the provision most often ignored in group companies, where the same individuals sit on both sides of an intra-group contract.
Related-party dealings approved properly. Contracts between the company and its shareholders, directors or their connected parties need the approvals the law and the articles specify. A transaction entered into without them is exposed to challenge later, usually by whoever bought the company or inherited the shares.
Accounts, audit and meetings held for real. Financial statements audited by a licensed auditor, a general assembly convened with proper notice, minutes that record what was decided. Companies that treat these as formalities and sign the paperwork after the fact find the gap when a bank, a buyer or a court asks for the record.
Related: See our Corporate Governance Framework Solutions in | Nour Attorneys for board-level implementation support.
DIFC and ADGM are different in kind
Both are common-law jurisdictions with their own courts and their own companies legislation. Directors' duties there are set out in statute in familiar common-law terms and are enforced through those courts rather than the onshore civil system. For a firm authorised by the DFSA or the FSRA, the regulator's rulebook adds a second layer: senior management arrangements, allocated responsibilities held by named individuals, compliance and risk functions, and outsourcing controls. Governance in a regulated DIFC or ADGM firm is therefore auditable in a way it is not for a private mainland company, and the regulator will ask to see it.
The mistake to avoid is running one board pack across a group that spans both systems and assuming it satisfies each. It generally satisfies neither.
Where governance now intersects with other obligations
Corporate tax under Federal Decree-Law No. 47 of 2022 applies for financial years starting on or after 1 June 2023, with 0% on taxable income up to AED 375,000 and 9% above that. The governance consequence is that the board now owns a filing position: the transfer pricing treatment of intra-group services, management fees and loans has to be supportable, and the documents behind it are the same shareholder and intercompany agreements that governance work produces. Groups that never papered their internal dealings find that gap at the first return.
Data handling under Federal Decree-Law No. 45 of 2021 sits with the board in the same way, with DIFC and ADGM operating their own separate data protection regimes for entities established there.
One item can come off the calendar. The Economic Substance Regulations were cancelled for financial years ending after 31 December 2022 by Cabinet Decision No. 98 of 2024. Obligations remain only for the FY2019 to FY2022 period, so historic filings and any open assessments still need attention, but there is no continuing annual notification to schedule. Governance calendars still carrying an ESR item are describing a requirement that no longer exists.
Related: Our corporate tax compliance uae team works alongside the governance review where intra-group arrangements are involved.
A short diagnostic
- Do the articles in force at the registry match the shareholders' agreement the shareholders believe they are operating under?
- Is there a written delegation of authority saying who can commit the company, and to what value, without a board resolution?
- Are the ultimate beneficial owner and shareholder registers current at the licensing authority?
- Are intra-group contracts in writing and priced on a basis you could explain to a tax auditor?
- Do minutes exist for the decisions that mattered, dated when they were taken?
A company that can answer those five questions has a governance framework. A company that cannot has a set of policies, which is a different thing.
Related: Explore our Corporate Governance Framework in | Nour Attorneys services, or start with a scoped corporate governance review.
Related Services: Explore our Corporate Governance Framework and Corporate Governance Uae services for practical legal support in this area.
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
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