LLC or Private Joint Stock Company? Choosing a Company Form After the 2026 Amendments

“Which legal form should we use?” It is usually one of the first questions a founder asks. Most people choose an LLC simply because everyone else does. For years, that was a reasonable default. However, since October 2025, it deserves a second look.

The reason is Federal Decree-Law No. (20) of 2025, which amended the Commercial Companies Law (Federal Decree-Law No. (32) of 2021). It was issued on 1 October 2025, published in the Official Gazette on 14 October and came into force the following day. The Ministry of Economy and Tourism briefed the market in January 2026, and implementing decisions have been coming out since.

The amendments do not create a new type of company. What they do is move several tools that used to be available only to joint stock companies, or only offshore, into the ordinary mainland LLC. That changes the trade-off between the two private forms.

What changed

For present purposes, six changes matter:

• LLCs may now issue different classes of shares with different voting, dividend, liquidation and redemption rights (Article 76). Joint stock companies may do the same under conditions set by Cabinet decision (Article 208).
• Drag-along and tag-along rights, and provisions on what happens to a shareholder’s interest on death, can be written into the memorandum or articles of association of an LLC or a private joint stock company (Article 14(4)).
• A private joint stock company may raise capital by private placement on a UAE financial market, under the securities regulator’s rules. Public offerings remain limited to public joint stock companies.
• The lock-up on founders’ shares in a private joint stock company has been relaxed. The Ministry can reduce or waive it, and it does not apply on a private placement or listing. Ministerial Decision No. (83) of 2026 deals with this.
• Converting an LLC into a joint stock company is simpler. Existing management can run the process, and a board and auditor are no longer preconditions.
• Companies can re-domicile between emirates, free zones and the mainland without being liquidated (Article 15 bis).

The LLC after the reforms

The LLC’s strengths are unchanged: no statutory minimum capital, management by one or more managers, and lower running costs. Its main limitation used to be that every share carried the same rights. If an investor wanted a liquidation preference, or a founder wanted to keep control after selling a stake, the usual answer was a side agreement, a joint stock company or an offshore holding structure.

That is no longer necessary. Share classes must be set out in the memorandum of association and recorded in the commercial register (in Dubai, with the Department of Economy and Tourism). The Ministry has indicated that the categories will include dividend shares, shares with priority on return of capital, preferred shares, shares of different nominal values and restricted shares. The detailed rules depend on a Cabinet decision, so the exact scope should be checked before a structure is finalised.

The memorandum can now also deal with exits and succession. On a shareholder’s death, it can give the remaining partners or the company a right to buy the shares at a value agreed with the heirs, or set by the court with expert assistance if there is no agreement.

There is also a practical fix for deadlock. The company must notify the authority when a manager’s appointment expires, and if shareholders cannot agree on board appointments, the licensing authority can appoint independent directors for a limited period.

One point is easy to miss. In an LLC, drag-along and tag-along rights still sit alongside the statutory pre-emption right of the other partners. If a majority wants to drag the minority into a sale to a third party, pre-emption can get in the way unless it has been clearly waived. In my view this is the area where drafting matters most. The memorandum and the shareholders’ agreement need to say the same thing, and the waiver needs to be explicit.

The private joint stock company after the reforms

A private joint stock company still costs more to set up and run. It needs issued capital of at least AED 5 million, fully paid, a board of directors, a general assembly and an auditor. What it offers in return is access to capital markets.

Under the amendments it can offer securities by private placement, meaning an invitation to selected investors, on a UAE market. This is not an IPO, but it is a genuine onshore route to funding and liquidity that did not exist before. The relaxed lock-up makes it more workable for founders, although the conditions of Ministerial Decision No. (83) of 2026 should be checked for each transaction.

There is also no 50-shareholder ceiling, and transfers are governed by the articles of association rather than the LLC’s statutory pre-emption regime.

The family company option in Dubai

Dubai’s Department of Economy and Tourism introduced a further legal form by Circular No. (9) of 2024: Limited Liability – Family Company. A new licence can be issued in this form, or an existing licence converted to it. The application generally needs:

1. a copy of the licence (for a conversion);
2. a draft memorandum of association;
3. copies of the parties’ passports and IDs; and
4. documents proving the family relationship between them.

The form becomes more useful after the 2026 amendments. A family can combine it with share classes and succession provisions in the memorandum, for example keeping voting control with the founding generation while giving the next generation an economic interest and setting out in advance what happens on a death.