UNITED ARAB EMIRATES Law and Practice Contributed by: Yasser Omar and Laryssa Perkins, Hadef & Partners LLC
1. Legal System and Regulatory Framework 1.1 Legal System
the application of the CCL is expressly excluded but the registrar may apply certain provisions of the CCL where the Jafza regulations are silent on a certain mat - ter. 1.2 Regulatory Framework for FDI If a foreign investor is looking to establish a company in the UAE, it must obtain a licence for the company from the relevant federal and/or emirate-level author - ity (for a mainland company) or the relevant free zone authority (for a free zone company) to carry on its pro - posed commercial activities. Through the commer - cial licensing regime, there may be restrictions on the sorts of activities that a foreign investor can engage in. Mainland Companies Historically, foreign investors could only own up to 49% of a UAE mainland company, subject to limited exceptions. At least 51% of the shares had to be owned by one or more UAE nationals, or a company which was itself wholly owned by one or more UAE nationals. Since 2 January 2022, the CCL has permitted 100% foreign ownership of mainland companies, with exceptions for activities with a strategic impact. This enables foreign investors to establish a local presence in the UAE and to operate in the UAE (outside the free zones) while retaining control of the business. The Departments of Economic Development (DED) of each emirate identify the commercial activities which foreign investors, whether natural or legal, are permit - ted to conduct in their respective emirate in the UAE. Foreign investors are not permitted, pursuant to Cabi - net Decision No 55 of 2021, to engage in activities with a strategic impact in the UAE unless approved to do so by the relevant federal authority concerned with regulating the activity with a strategic impact. Activi - ties with a strategic impact are as follows: • security, defence and military activities; • banks, exchange houses, finance companies and insurance; • currency printing; • telecommunications; • pilgrimage (Hajj) and Umra services;
The legal system in the UAE depends on the jurisdic - tion in which a business operates but can broadly be divided into two categories: mainland and free zones. The mainland regime follows a civil law system. The primary law governing mainland companies is Federal Decree-Law No 32 of 2021 on Commercial Compa - nies (CCL), which was recently amended by Federal Decree-Law No 20 of 2025 (the “2025 CCL Amend - ment Law”). Unless exempted, the CCL applies to all commercial companies established in the UAE, for - eign companies operating in the UAE or establishing a head office, branch or representative office in the UAE, and branches or representative offices of companies established in free zones and financial free zones that operate outside that zone and within the UAE. There are many free zones in the UAE and the legal framework in each free zone varies depending on whether the free zone is a financial free zone or not and the regulations established by the relevant free zone authority. By virtue of the UAE Constitution, the financial free zones in the UAE (currently, the Abu Dha - bi Global Market (ADGM) and the Dubai International Financial Centre (DIFC)) are subject to all federal laws other than federal civil and commercial laws. This enables financial free zones in the UAE to adopt their own civil and commercial laws. The ADGM has adopted the English common law system, while the DIFC has adopted a legal and regulatory framework based on the common law principles of English law. Accordingly, the CCL does not apply to companies incorporated and operating in the ADGM or the DIFC as each of these zones has their own company law and regulations. Non-financial free zones in the UAE are subject to the UAE federal legal system supplemented by the rele - vant free zone regulations. However, the CCL does not apply to companies incorporated in these free zones where there is a special provision stipulated to this effect in the laws and regulations of the relevant free zone. For example, in the Jebel Ali Free Zone (“Jafza”),
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