All posts by : Lionel A. Sequeira

Almost a year has passed since Federal Decree-Law No. 20 of 2025 made substantial changes to Federal Decree-Law No. 32 of 2021 on Commercial Companies (the “Commercial Companies Law”). The early commentary has settled, and the question has changed from what the law says to what companies can actually do with it. The answer is mixed. Some of the changes can already be used by amending the Company’s constitutional documents. Others are still waiting on implementing resolutions from the Cabinet, which have not yet been published.

For most businesses, that first group is where the value lies. None of it depends on the Cabinet. It depends on the right wording in the memorandum or articles of association. Without that wording, the law gives a company nothing new. With it, several long-standing gaps in onshore company structuring can be closed, though what closes them is the drafting rather than the amendment.

What’s Available Today

Drag-along and tag-along – Partners in an LLC and shareholders in a private joint stock company can now write both into the memorandum or articles of association. A drag-along lets one or more holders make the others sell to a third party once specific, pre-agreed conditions are met. A tag-along lets a holder join a sale on the same terms as the seller.

What the amendment gives is the framework. The conditions are left to the parties, and those conditions are the clause. What triggers the drag, whether a minimum price or a floor applies, how much notice the minority gets, whether they can require better terms, and what happens if one of them refuses to sign. Two companies can adopt the same statutory permission and end up with entirely different outcomes depending on how these are drafted. A clause that copies out the wording of the law and stops there will not survive the first sale it is used in.

A partner’s death – The same provision lets the constitutional documents give the remaining holders, or the company itself, a pre-emptive right to buy a deceased holder’s stake at a price agreed with the heirs. If there is no agreement, the court appoints experts to value it. This is not a default rule: it applies only where the documents provide for it.

Here, too, the detail is where the value lies. The law does not say how long the heirs have to respond, how the price is set before it goes to court, whether more than one holder can exercise the right and in what proportions, or how the purchase is funded. Leaving those open means an expert valuation and a wait, at exactly the moment a family business can least afford either.

Moving between registries – A company can transfer its registration from one competent authority to another, including between the mainland and a free zone, and keep its legal personality. It needs a special resolution of the general assembly or the approval of an absolute majority of partners. Both registries’ systems must allow the transfer, and nothing may be annotated on the trade register that would block it. Both authorities must approve, and joint stock companies also need the approval of the Ministry or the Authority, as the case may be. The decision must then be published. A company moving onto the mainland must also bring itself into line with the Commercial Companies Law.

Keeping the same legal entity doesn’t carry your commercial relationships across. Banks, landlords, insurers, sector regulators and the IP registry each have their own consent and recordal requirements, and a change-of-control clause can be triggered by a move the law itself treats as continuous.

Board continuity in LLCs – If a Board of Managers’ term expires without reconstitution, the board carries on for up to six months. After that, the general assembly must form a new board. If it does not, the competent authority may appoint managers for up to one year.

Awaiting Implementing Rules

Share classes – An LLC’s shares can now be divided into classes that carry different rights, such as different values, voting rights, redemption terms, or priority on profits or on liquidation. Each class, with its rights and restrictions, must be recorded on the trade register. The detail, however, is left to the Cabinet, which is to determine the permitted classes, their conditions and the procedures. For joint stock companies, the law allows the Cabinet to specify further classes of shares by resolution. As of today, no such resolution appears on the Ministry of Economy and Tourism’s published legislation list.

What to Do

Review your memorandum of association against your shareholders’ agreement. Terms that currently sit only in the agreement, such as exit rights or arrangements on a partner’s death, may now belong in the Company’s constitutional documents. Where a structure depends on rules the Cabinet has not yet issued, check with the registry before committing to it.

The clauses also have to work together. A drag-along has to sit consistently with the transfer restrictions, the pre-emption rights and the death mechanism, and conflicts between them tend not to surface until the sale or the succession that relies on them. That is a drafting exercise across both documents, not a clause pulled from a precedent.

It is work worth doing before a funding round or a succession rather than during one, and worth having drafted professionally.

Lionel A. Sequeira is a Legal Consultant – Intellectual Property & Commercial at Al Midfa & Associates.

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