Multiple Share Classes in the UAE (2026): a Practical Guide for Founders, Investors and Company Advisors

Last reviewed: 14 July 2026

The introduction of multiple share classes in the UAE through Federal Decree‑Law No. 20 of 2025 has given founders, investors and family offices a long‑awaited structuring tool, the ability to separate voting control from economic ownership within a single UAE entity. Until now, most mainland LLCs and many free‑zone companies operated under a one‑share‑one‑vote default, forcing parties to rely on complex side agreements to replicate protections that multi‑class equity delivers natively. This guide explains exactly how the new framework operates, which entity types are in scope, and what steps advisors must take to draft, approve and register a multi‑class structure under the commercial companies law UAE amendments now in force.

Whether you are launching a new venture, closing a Series A, or restructuring an established family group, the checklist below will take you from legislative overview to filed and compliant documentation.

Quick decision checklist, is a multi‑class structure right for you?

• Permitted? Yes, subject to the entity type, the articles of association (AOA) and applicable registry or free‑zone rules.
• Key steps: (1) choose the correct entity form; (2) define each class and its rights; (3) pass an articles of association amendment by the required majority; (4) file with the relevant registry or free‑zone authority; (5) update the share ledger, certificates and shareholder agreement.
• Timeline: two to six weeks for mainland LLCs; two to four weeks for DWTC free‑zone companies; other free zones vary.
• Professional support: engage UAE Advisory lawyers experienced in company formation UAE matters and equity structuring before drafting begins.

Can UAE Companies Issue Multiple Share Classes? The Legal Basis

Yes. Federal Decree‑Law No. 20 of 2025, which amends the UAE Commercial Companies Law, expressly permits companies to create and issue more than one class of shares, each carrying distinct rights as to voting, dividends, conversion, redemption and liquidation. The amendments took effect in 2026 and apply to mainland limited liability companies (LLCs), public joint‑stock companies (PJSCs) and, through parallel free‑zone frameworks, to an increasing number of free‑zone entities.

Before this reform, the commercial companies law UAE framework offered limited statutory flexibility for share differentiation. Founders who wanted weighted voting or liquidation preferences had to construct those rights contractually through side letters and shareholder agreements that sat outside the AOA. The 2026 changes bring the UAE closer to common‑law jurisdictions such as the ADGM and DIFC, which have long supported multi‑class structures under their own company regulations, and, critically, extend similar capability to mainland entities for the first time at a federal level.

In parallel, the Dubai World Trade Centre Authority (DWTCA) has introduced a dedicated multiple‑share‑class framework for companies registered under its free‑zone regime. The DWTCA framework sets out the application and registrar‑approval route for DWTC‑licensed entities that wish to adopt multi‑class capital structures, providing a ready‑made regulatory pathway for technology companies and start‑ups operating within that zone.

Which Entity Types Are in Scope?

• Mainland LLC. The most commonly used commercial vehicle in the UAE. Federal Decree‑Law No. 20 of 2025 now allows LLCs to specify different classes of partner interests or shares in their AOA, subject to the required shareholder approval thresholds.
• Mainland PJSC. Public joint‑stock companies may also issue different classes of shares, though additional requirements under the Securities and Commodities Authority (SCA) rules apply where shares are listed or offered to the public.
• Free‑zone companies. Many free zones, including the DWTCA, and the existing common‑law zones ADGM and DIFC, permit multi‑class structures. Other zones are progressively adopting similar frameworks; advisors should confirm current policy with the specific free‑zone authority before proceeding.

What Are Multiple Share Classes and How Do Rights Differ?

Multiple share classes exist when a company’s capital is divided into two or more categories of shares, each category carrying a different bundle of rights. In the UAE context, the share classes most commonly encountered after the 2026 reforms fall into the categories outlined in the table below.

Voting Rights, Unequal Votes and Weighted Voting Clauses

The most immediate benefit of multiple share classes in the UAE for founders is the ability to assign unequal voting rights. A typical weighted‑voting clause grants founder shares ten votes per share while ordinary investor shares carry one vote per share. This allows a founder holding a minority economic stake to retain majority board and shareholder‑meeting control, a structure commonly referred to as dual‑class equity.

Economic Rights, Dividends, Pre‑Emptive Rights and Liquidation Preferences

Each class can carry different dividend entitlements. Preference shares often receive a fixed‑rate priority dividend before any distribution reaches ordinary shareholders. Liquidation preferences, whether participating or non‑participating, determine the order and amount each class receives upon winding‑up or a deemed‑liquidation event such as a trade sale. Pre‑emptive rights can also be allocated on a class‑specific basis, giving certain shareholders priority on new issuances.

Conversion and Redemption Mechanics

Convertible shares change class upon a trigger event specified in the AOA, commonly a qualifying funding round, an IPO, or a date‑certain deadline. The conversion formula (price‑per‑share, adjustment for anti‑dilution) must be set out clearly in both the articles and the shareholder agreement UAE parties will rely on. Redeemable shares give either the company or the holder a call or put option, enabling structured exits without a secondary market.

When to Use Multiple Share Class Structures

Choosing to implement a multi‑class capital structure is a governance decision with long‑term consequences. The right structure depends on who the stakeholders are, what control dynamics they need, and whether an exit through listing or sale is contemplated.

• Founders seeking post‑dilution control. Weighted‑voting founder shares UAE structures let entrepreneurs raise successive equity rounds without ceding board or resolution control.
• VC/PE investors requiring downside protection. Liquidation preferences and anti‑dilution adjustments embedded in preference‑share rights protect investors against down‑rounds and unfavourable exits.
• Family offices separating management from ownership. Non‑voting or limited‑voting classes allow passive family members to hold economic interests without interfering in day‑to‑day operations.
• Employee incentive programmes. Non‑voting shares or convertible shares can serve as equity‑based compensation without diluting governance control.

Red Flags, Governance, Marketability and Exit Considerations

Multi‑class structures are not without risk. Institutional investors may resist weighted‑voting founder shares because they reduce shareholder accountability. A dual‑class structure can also complicate an IPO: exchange rules, including those administered by the SCA, may impose conditions or prohibit certain class arrangements for listed companies. Advisors should model exit scenarios early and include sunset clauses that convert founder shares to ordinary shares on a defined timeline or triggering event.

Worked example, founder control math. A founder holds 1,000 Class B shares carrying 10 votes each (10,000 total votes). Investors hold 9,000 Class A ordinary shares carrying 1 vote each (9,000 total votes). The founder controls approximately 52.6 % of voting power despite holding only 10 % of the economic equity, enough to pass ordinary resolutions unilaterally.

Implementation: Amending Articles of Association and Shareholder Agreements

Documenting multiple share classes in the UAE requires coordinated changes across three layers: the company’s constitutional documents (AOA or memorandum), the shareholder agreement, and the share register. The step‑by‑step checklist below covers the full workflow.

Pre‑Work, Consultations and Regulatory Pre‑Checks

1. Confirm the entity type supports multi‑class shares (see Section 5 below for entity‑specific requirements).
2. Circulate a term sheet or heads of terms to all existing shareholders summarising the proposed classes and rights.
3. Obtain preliminary tax advice, particularly on UAE corporate‑tax treatment of different dividend streams and any withholding obligations.
4. Check whether the proposed structure triggers SCA notification requirements (relevant for PJSCs and entities that may cross public‑offering thresholds).
5. Engage UAE Advisory counsel to draft amendments and coordinate filings.

Drafting the Articles of Association Amendment, Must‑Have Clauses

The articles of association amendment is the single most important document. Every right, restriction and mechanic attached to each class must be specified in the AOA, a shareholder agreement alone is not sufficient to create enforceable class rights under the commercial companies law UAE framework. At a minimum, the amended AOA should contain the following clause categories:

• Class definition clause. Model wording, adapt to facts: “The share capital of the Company shall be divided into Class A Ordinary Shares and Class B Founder Shares, each having the rights set out in Articles [X] to [Y].”
• Voting formula clause. Model wording: “Each Class B Founder Share shall carry [10] votes on any resolution; each Class A Ordinary Share shall carry [1] vote.”
• Dividend entitlement clause. Model wording: “Holders of Class A Preference Shares shall be entitled to receive a cumulative preferred dividend of [X]% per annum before any distribution to holders of Ordinary Shares.”
• Conversion mechanics clause. Model wording: “Each Class B Share shall automatically convert into one Class A Share upon the earlier of (a) a Qualifying IPO and (b) the [fifth] anniversary of issuance.”
• Transfer restriction clause. Model wording: “No Class B Share may be transferred without the prior written consent of holders of [75]% of Class A Shares, and any attempted transfer shall be void.”
• Anti‑dilution adjustment clause. Model wording: “In the event of a Down Round, the conversion price of Class A Preference Shares shall be adjusted on a weighted‑average basis.”

Shareholder Agreement Updates, Investor Protections

While the AOA creates the class structure, the shareholder agreement UAE investors rely on typically layers in additional protections and obligations that go beyond statutory minimums. Key provisions to update or add include:

• Information rights. Quarterly financials, annual audits and budget delivery obligations owed to preference shareholders.
• Board composition. Nominee‑director appointment rights linked to specific share classes.
• Protective provisions (veto rights). A list of reserved matters requiring investor‑class consent, e.g., new debt above a threshold, related‑party transactions, changes to class rights.
• Drag‑along and tag‑along rights. Specify which class can trigger a drag and which classes benefit from tag protection.
• Pre‑emptive rights on new issuances. Allocate by class, with priority to existing preference holders.

Share Register, Certificates and Registry Filings

Once the AOA amendment is approved, the company must update its share register to reflect the new classes, issue new share certificates (or updated electronic entries), and file the amended AOA with the applicable registry. For mainland LLCs, this means filing with the relevant emirate’s Department of Economy and Tourism, such as DED in Dubai, and, where required, updating the commercial licence. For free‑zone companies, the amended constitutional documents must be submitted to the relevant free‑zone registrar for approval and registration.

Voting Thresholds and Resolution Language

Under Federal Decree‑Law No. 20 of 2025, amending the AOA of a mainland LLC typically requires approval by partners holding a specified supermajority of the capital. The exact threshold may vary depending on the existing AOA and the nature of the amendment. A sample resolution might read:

“RESOLVED that the Memorandum and Articles of Association of the Company be amended to create a new Class B Founder Share as set out in the draft amendments circulated to the Partners and annexed hereto, and that the Manager be authorised to file the amended Articles with the [Department of Economy and Tourism / Ministry of Economy] and to take all steps necessary to give effect to this resolution.”

Entity‑Specific Checklist: Mainland LLC vs Free Zone vs PJSC

The procedural requirements for implementing multiple share classes in the UAE differ depending on the entity type. The comparison table below summarises the key filing and approval obligations.

Free Zone Differences, DWTC Framework Specifics

The DWTCA’s dedicated framework is noteworthy because it provides a structured application route specifically designed for multi‑class capital. Companies registered in the DWTC free zone submit a framework application to the registrar detailing each proposed class and its rights. Once approved, the amended constitutional documents are filed and the company may issue shares under the new structure. This eliminates much of the uncertainty that free‑zone founders previously faced when attempting to introduce share differentiation.

Mainland LLC Specifics, Partner Shares vs Share Classes

Historically, UAE mainland LLCs referred to their equity as “partner shares” rather than distinct share classes. Federal Decree‑Law No. 20 of 2025 bridges this gap by allowing LLCs to define multiple categories of partner interest within their AOA, each carrying specified rights. Advisors should ensure the amended AOA language explicitly overrides any existing one‑class‑default language in the company’s original memorandum. Particular care is needed where existing partner‑share‑transfer provisions reference “all shares” generically; these must be updated to operate on a class‑by‑class basis.

Regulatory, Transfer and Tax Considerations

Introducing multiple share classes in the UAE does not occur in a regulatory vacuum. Several additional compliance layers must be addressed.

Transfer Scenario Checklist

• Right of first refusal. The AOA should specify whether transfer restrictions operate per class or universally. A transfer of Class B founder shares, for example, might require unanimous consent, while Class A transfers require only board approval.
• Notarisation. Mainland LLC share transfers typically require notarisation before the relevant economic department. Confirm whether the introduction of new classes changes the notarisation procedure or fee.
• Free‑zone registry notification. Any change of shareholding, including a conversion from one class to another, must be notified to the free‑zone registrar within the period prescribed by the relevant authority’s regulations.
• Securities‑law triggers. If a class of shares is offered to more than a prescribed number of persons, the SCA’s public‑offering rules may be engaged. Advisors should check the SCA thresholds before any broad‑based issuance.

Tax and Permanent‑Establishment Considerations

The UAE Federal Tax Authority (FTA) administers the federal corporate‑tax regime. Different classes of shares may result in different dividend‑distribution patterns, and advisors should verify whether priority‑dividend obligations on preference shares create any withholding exposure or affect the company’s qualifying‑income calculations. For foreign investors, restructuring economic and control rights via a new share class could, depending on the facts, alter the permanent‑establishment analysis. Tax counsel should be engaged before finalising the structure, and the latest FTA guidance should be consulted directly.

Practical Drafting Toolkit: Model Clauses and Worked Examples

The model clause snippets below are provided as starting points only. Each must be adapted to the specific transaction, entity type and applicable law. Label all clauses in the final AOA as “Model wording, adapt to facts.”

• (a) Class definition. “The authorised share capital comprises [number] Class A Ordinary Shares and [number] Class B Founder Shares, each of AED [par value].”
• (b) Voting formula. “On a poll, each Class B Share confers [10] votes and each Class A Share confers [1] vote.”
• (c) Dividend entitlement. “Class A Preference Shares carry a cumulative preferred annual dividend of [X]%, payable before any distribution to other classes.”
• (d) Conversion trigger. “All Class B Shares convert automatically to Class A Shares on the completion of a Qualifying IPO.”
• (e) Drag‑along. “If holders of [75]% of Class A Shares accept a bona fide offer, all remaining shareholders shall be obliged to sell on the same terms.”
• (f) Anti‑dilution (weighted average). “The conversion price shall be adjusted using the broad‑based weighted‑average formula set out in Schedule [X].”

Worked example, founder control vs economic stake. Assume a company has two classes: 500 Class B shares (10 votes each = 5,000 votes) held by the founder; and 4,500 Class A shares (1 vote each = 4,500 votes) held by investors. The founder holds 10 % of total shares but commands 52.6 % of total votes (5,000 ÷ 9,500). Economically, the founder receives 10 % of any dividend or liquidation proceeds. Investors hold 90 % of the economics but only 47.4 % of votes. This structure preserves operational control while aligning economic incentives with the investor base.

Company Restructuring UAE: Converting an Existing Company to Multi‑Class

Existing single‑class companies can migrate to a multi‑class capital structure through a company restructuring UAE process. The consolidated checklist is as follows:

1. Board resolution. The board (or managing partner) resolves to propose the creation of new share classes and circulates draft amended AOA to shareholders.
2. Shareholder approval. Obtain the required supermajority (as specified in the existing AOA and the commercial companies law UAE provisions) at a general meeting or by written resolution.
3. AOA update. Finalise and execute the amended articles of association, incorporating all class definitions, rights and mechanics.
4. Registry filing. File the amended AOA with the relevant registry (DED, Ministry of Economy, or free‑zone registrar) and obtain confirmation of registration.
5. Tax and regulatory review. Confirm corporate‑tax treatment of new dividend streams with tax counsel; check SCA and FTA filings.
6. Operational updates. Update the cap table, share register, share certificates (or electronic entries), and execute a restated shareholder agreement reflecting the new classes.

Industry observers expect the typical timeline for a straightforward conversion to be four to eight weeks, including drafting, approval and filing. Government filing fees vary by emirate and free zone; legal and advisory costs will depend on the complexity of the class structure and the number of stakeholders involved.

Conclusion

Multiple share classes in the UAE are now a viable, legislatively supported structuring tool for founders, investors and family offices alike. Federal Decree‑Law No. 20 of 2025, together with free‑zone frameworks such as the DWTCA’s multiple‑share‑class regime, has removed the principal statutory barrier that previously limited equity differentiation on the mainland. Successful implementation, however, depends on precise drafting of the articles of association amendment, coordinated shareholder agreement updates, correct registry filings and careful attention to tax and regulatory implications. Advisors who invest the time in building a robust, class‑specific AOA and shareholder agreement will deliver structures that protect control, attract investment and stand up to regulatory scrutiny across every stage of a company’s lifecycle.

Sources

1. Federal Decree‑Law No. 20 of 2025, UAE Federal Decree‑Laws (Official Portal)
2. Dubai World Trade Centre Authority, Multiple Share Class Framework (Press Release)
3. UAE Ministry of Economy, Company Registration and Commercial Companies Guidance
4. UAE Securities and Commodities Authority (SCA)
5. UAE Federal Tax Authority (FTA)
6. Dubai Department of Economy and Tourism (DED)