Are Multi-Class Shares Allowed in the UAE? | A Clear Breakdown for Founders & Investors

When founders or investors think of raising capital, they naturally think of equity rounds, investor rights, ESOP pools, preference shares, and other structured instruments. In jurisdictions like India, the UK, or the US, issuing different classes of shares is standard practice.

But what about the UAE?

A common assumption is that, under Sharia principles, companies in the UAE mainland cannot issue different classes of shares. This understanding was largely correct for many years. However, with the recent updates to UAE commercial laws, many companies are now asking:

“Are multi-class shares finally permitted in the UAE outside ADGM and DIFC?”

Below is a clear, updated breakdown.

The Historical Position | Mainland UAE Did Not Permit Different Share Classes

Federal Decree-Law No. 32 of 2021 (Commercial Companies Law or CCL) required that all shares rank pari passu. This meant:

• No preferential voting rights
• No preferential dividend rights
• No liquidation preferences
• No convertibles are structured as a “different class”
• ESOPs were possible only through phantom schemes, not actual share classes

Essentially, mainland UAE companies (especially LLCs) operated on a single-class share system. So for years, the only way UAE companies could adopt modern cap-table structures was to incorporate in:

• ADGM (Abu Dhabi Global Market), or
• DIFC (Dubai International Financial Centre)

Both are common-law jurisdictions and expressly allow multiple share classes, ESOPs, convertibles, and typical venture-style instruments.

Most UAE Free Zones Also Did Not Permit Different Share Classes

Most UAE free zones historically followed a structure similar to the mainland, which meant companies could issue only one class of shares. Preferential voting, dividend rights, liquidation preferences, and convertible instruments treated as separate classes weren’t allowed, and ESOPs were generally limited to phantom arrangements. Because of these limitations, founders who needed proper multi-class setups, ESOP pools, or investor-style protections usually opted for ADGM or DIFC, the only UAE jurisdictions that have always permitted flexible, common-law-based share structures.

⁠What Has Changed Recently?

The UAE has introduced amendments signalling modernization of its corporate framework. Among these updates is a move toward allowing different classes of shares on the mainland, subject to:

• Cabinet decisions
• Regulator (SCA) rules
• Registration/filing procedures

However, and this is crucial, as of now, full practical implementation is pending. Even though the law now permits the concept, the specific rules that define:

• What classes are allowed
• What rights they may carry
• How must they be registered
• How transfers/redemptions work

are not yet fully operational or applied consistently across registries

Are Multi-Class Shares Allowed Right Now?

The short answer – Mainland UAE (LLCs): Mostly Not Yet Practically Allowed

Even with recent amendments, until implementing regulations become active, mainland companies cannot reliably issue structured multi-class shares like:

• Preferred equity
• Anti-dilution preference shares
• Investor liquidation preference shares
• ESOP share classes
• Convertible preferred rounds
• SAFE-style instruments

So in practice, the older position still stands today. ADGM and DIFC fully allow and are commonly used if a company wants:

• ESOP pools
• Preference shares
• Multiple share classes
• Waterfall/layered liquidation rights
• VC-style term sheets

Then ADGM and DIFC remain the only clear, legally certain routes within the UAE. This is why most investors and venture lawyers continue to structure UAE startups in ADGM or DIFC even in 2025.

⁠Final Conclusion

The UAE mainland has traditionally kept a strict stance on share structures, which meant multi-class shares simply weren’t an option. ADGM and DIFC took a different path from the start, allowing flexible, investor-friendly share classes that support modern fundraising and governance models. Recent federal updates suggest the mainland may eventually open the door to multi-class shares, but the shift isn’t active or usable in practice yet. As things stand in 2025, any business planning structured or tiered share issuance is still better off operating through ADGM or DIFC, where the framework is already clear, tested, and fully enforceable.