UAE adds 250,000 more companies in 2025 as LLC rules to be simplified

New legislation expected this year with similar plans for public stock companies, Economy Minister Abdulla bin Touq says

Abdulla bin Touq, UAE Minister of Economy, says the government has worked to modernise competitive economic legislation. Alvin R Cabral / The National

About a quarter of a million companies launched operations in the UAE in 2025, official figures show, as authorities prepare new legislation under the Commercial Companies Law to simplify rules for limited liability companies (LLCs).

The figure is about a third of the 760,000 companies that were established since the law's introduction in September 2021 to the end of 2024, and the plan is to reach two million companies over the next 10 years, the Ministry of Economy and Tourism said on Tuesday.

As of the end of last year, the number of companies had hit approximately 1.4 million, which had also helped create a significant number of jobs, the ministry said, adding that the number of small and medium enterprises owned by UAE nationals has leapt 63 per cent over the past five years.

The Commercial Companies Law was amended last month as part of efforts to improve competitiveness and provide a flexible and robust legal environment.

The ministry expects the number of new company licences issued to increase by up to 15 per cent in the first year of implementing the changes.

“The government has worked to modernise competitive economic legislation that keep pace with the future and create flexible and open horizons for companies [in] all sizes and legal forms,” Abdulla bin Touq, Minister of Economy and Tourism, told a news briefing in Dubai.

"To reach the two-million target, we need to have more agility, accessibility, movements, types and more sophistication in your economy, and I think this is an opportunity for us as well to change the law and make sure that it's actually very agile," he said.

The ministry is also working with authorities to enact a legislation that will provide more clarity on the issuance of shares within LLCs, which is expected to be finalised and launched in 2026, Mr bin Touq said.

An LLC is a business structure that typically combines the characteristics of a corporation and partnerships or sole proprietorship, with personal assets more protected from risks. In the UAE, LLCs gain access to the local market, from customers to partners and suppliers, helping improve their businesses.

The regulation that is being drawn up has six key points, including guidelines for interest shares, priority to get capital upon liquidation or ending of a contract, and limited shares, which have restrictions when it comes to transferring or selling them.

UAE authorities are also identifying rules that will allow companies re-establish themselves as LLCs, Mr bin Touq said.

“We are expecting the resolution this year,” he said, adding that similar plans for private stock companies are also being discussed.

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The government is "aiming to provide the highest levels of flexibilities in ownership structures, corporate management, and exit and sale processes, in addition to addressing new articles regulating the transfer of companies registering in the commercial register", he said.

"We believe these amendments will represent a qualitative lead in governance and regulation."

The UAE's Commercial Companies Law allowed the full foreign ownership of onshore companies, removing the requirement for a major local shareholder. The legislation was part of efforts to boost the country's competitiveness to attract businesses and foreign investment.

On Tuesday, the seasonally adjusted S&P Global UAE Purchasing Managers' Index showed a reading of 54.2 for December, as non-oil private sector activity continued to expand, owing to new business orders and strengthening market conditions, even as companies felt pressure from rising prices.

The Emirates was also ranked 10th globally for inbound foreign direct investment in 2024, with Dh167.6 billion ($45.6 billion) in FDI inflows, according to latest data from the UN Conference on Trade and Development.

The amount marks a 48 per cent annual growth, with the UAE accounting for 37 per cent of all FDI inflows into the region. The country also ranked second globally, after the US, in the number of newly announced foreign direct investment projects. The country aims to increase FDI to Dh1.3 trillion by 2031.

To boost FDI, the UAE has also unveiled other initiatives such as reduced visa restrictions and incentives for small and medium enterprises.

It also unveiled the NextGen FDI programme, which seeks to speed up licensing, increase the issuance of bulk or golden visas, improve banking services and provide commercial and residential lease incentives for technology companies seeking to relocate to the country.

The UAE's signing of Comprehensive Economic Partnership Agreements with its trade partners has also supported the inflow of investments. Launched in 2021, Cepa deals reduce tariffs and remove trade bottlenecks and boost bilateral investment in priority areas.

The UAE will continue to build economic momentum with its "flexible and continuously evolving approach, based on our ongoing monitoring of economic trends and our close engagement with the market and the opportunities in the sector and business sector today", Mr Bin Touq said.

The UAE's tourism sector, meanwhile, contributed Dh291 billion, or 15 per cent, to the country's gross domestic product in 2025, the ministry said.