Free Zone Companies UAE 2025 Amendment: Are They Subject to Federal Companies Law?
إن Federal Decree-Law No. (20) of 2025 amended key provisions of Federal Decree-Law No. (32) of 2021.
Following this legislative development, an important question emerged:
Under the Free Zone Companies UAE 2025 Amendment, are free zone companies now automatically subject to the UAE Federal Commercial Companies Law?
This article provides a structured and practical legal reading of the amendment and clarifies how the Free Zone Companies UAE 2025 Amendment impacts companies operating in the UAE.
Free Zone Companies UAE 2025 Amendment: The General Rule Under Article (5)
Article (5) confirms a fundamental principle under the Free Zone Companies UAE 2025 Amendment:
The provisions of the UAE Federal Commercial Companies Law shall not apply to companies incorporated in free zones with respect to matters for which a specific provision is set out in the laws or regulations of the relevant free zone.
What This Means in Practice
Under the Free Zone Companies UAE 2025 Amendment:
Free zone regulations remain the primary legal framework.
Federal corporate governance does not automatically override free zone rules.
Incorporation inside a free zone does not, by itself, trigger federal law application.
This confirms the continued legislative autonomy of UAE free zones.
When Does the Free Zone Companies UAE 2025 Amendment Trigger Federal Law Application?
The Free Zone Companies UAE 2025 Amendment clarifies that the trigger is not incorporation — but operational activity outside the free zone.
1) Free Zone Companies Conducting Business Outside the Free Zone
Under Article (3), if a free zone company:
Conducts business within the State outside the free zone boundaries, or
Operates through a branch or representative office in the mainland
Then the federal law applies within that scope.
This is one of the most important clarifications introduced by the Free Zone Companies UAE 2025 Amendment.
2) Establishing a Branch Under the Free Zone Companies UAE 2025 Amendment
If free zone legislation permits external activity, a company may establish:
A mainland branch
A representative office
In that case, the Free Zone Companies UAE 2025 Amendment confirms that the federal companies law applies to that operational presence.
Application is activity-based — not incorporation-based.
Free Zone Companies UAE 2025 Amendment and Other Legislative Compliance
The amendment includes an important clause:
Without prejudice to the requirements of any other legislation in force in the State.
This means that even if the Free Zone Companies UAE 2025 Amendment does not fully subject a company to federal corporate governance, the company may still need to comply with:
UAE Corporate Tax legislation
Regulatory licensing frameworks
Data protection regulations
Sector-specific compliance rules
This creates parallel compliance obligations without replacing the free zone legal framework.
Financial Free Zones Under the Free Zone Companies UAE 2025 Amendment
The discussion also extends to financial free zones such as:
These zones operate under independent legal systems.
Under the Free Zone Companies UAE 2025 Amendment, exposure to federal law generally arises only when activities are conducted outside the zone boundaries within the State.
Transfer of Registration Under the Free Zone Companies UAE 2025 Amendment
One of the most practical additions is Article (15) (bis), allowing:
Transfer from free zone to mainland
Transfer from mainland to free zone
Transfer between competent authorities
What Happens After Transfer to Mainland?
If a company transfers from a free zone to the mainland under the Free Zone Companies UAE 2025 Amendment:
It must regularize its status.
It must comply with the UAE Federal Commercial Companies Law.
It must align its constitutional documents and governance structure accordingly.
This is not a procedural formality — it is a structural legal shift.
Practical Compliance Checklist Under the Free Zone Companies UAE 2025 Amendment
Review free zone legislation first
Assess whether activities extend outside the free zone
Review branch or representative office exposure
Ensure compliance with other federal legislation
Plan carefully before transferring registration
Conclusion: How the Free Zone Companies UAE 2025 Amendment Reshapes Corporate Structuring
The Free Zone Companies UAE 2025 Amendment does not abolish the autonomy of free zones.
Instead, it clarifies:
The boundary between free zone regulation and federal corporate law
The compliance trigger when operating outside the zone
The legal consequences of transferring to mainland
For companies operating in the UAE, understanding the Free Zone Companies UAE 2025 Amendment is now essential for risk management, governance structuring, and expansion planning.
