The UAE has taken another step in refining its corporate governance framework with the introduction of Chairman’s Board Resolution No. 24 of 2025, commonly referred to as Resolution 24. Effective from August 26, 2025, this regulation introduced important reforms for leadership structures in public joint stock companies (PJSCs).
For years, corporate governance in the UAE followed a strict rule that the Chairman of the Board and the Chief Executive Officer could not be the same person. This separation of powers was meant to safeguard against conflicts of interest and excessive concentration of authority.
Resolution 24 changes that approach by allowing PJSCs to combine the roles of Chairman and CEO under specific conditions and offers companies with greater flexibility while also introducing tougher safeguards on independence and shareholder involvement.
This development has wide-ranging implications for investors as well. For companies navigating business setup in the UAE, understanding these new governance rules is vital for compliance and investor confidence.
The Key Change: Combining Chairman and CEO Roles
The most notable update in Resolution 24 is the allowance for a single individual to hold both the Chairman and CEO positions. However, this is not a blanket permission. Companies may only adopt this model if:
- Their Articles of Association explicitly authorize the arrangement.
- Shareholders approve it through a special resolution at the general assembly.
This means that flexibility is granted, but only with clear legal authorization and majority shareholder support. The model recognizes that in some companies, combining leadership roles may streamline decision-making. However, to counterbalance the risks, strict independence and governance conditions must be met.
Emphasis on Independent Directors
Resolution 24 makes independence a central pillar of corporate governance. If a company decides to merge the Chairman and CEO roles, at least 75 percent of its board must consist of independent directors.
This is a significant increase compared to earlier requirements and ensures that decision-making power is not overly concentrated. In addition:
- The permanent committees (Audit, Nomination, and Remuneration) must be composed entirely of independent directors.
- The Vice Chairman must be independent and must step in to lead meetings when discussions involve executive performance, remuneration, or other sensitive matters.
This emphasis creates a governance structure that prioritizes impartial oversight, even if the Chairman also serves as CEO.
The New Role of the Governance Committee
A new mandatory body, the Governance Committee, has been introduced under Resolution 24. This committee, made up exclusively of independent directors, plays a key role in maintaining checks and balances. Its responsibilities include:
- Monitoring the performance of the CEO.
- Reviewing annually whether combining the Chairman and CEO roles remains appropriate.
- Providing recommendations to shareholders on leadership structure.
- Ensuring that recusal rules are applied whenever conflicts arise.
Shareholder Approval and Disclosure
Another important shift under Resolution 24 is the expanded role of shareholders. When a company wishes to combine the roles of Chairman and CEO, it must prepare a justification study. This study must explain:
- Why the combined role is necessary.
- How board independence will be safeguarded.
- What oversight mechanisms are in place.
The justification must be presented at the general assembly, disclosed in annual governance reports, and published on the company’s website. Shareholder approval is also time-limited; it expires with the board’s term and must be renewed if the structure is to continue.
Addressing Governance Risks
Combining the Chairman and CEO roles naturally raises concerns about concentration of power. Resolution 24 addresses these risks by:
- Requiring high levels of board independence.
- Mandating annual reviews by the Governance Committee.
- Expanding recusal rules for conflict-of-interest situations.
- Assigning a stronger role to the Vice Chairman in sensitive deliberations.
- Requiring succession planning and conflict-handling procedures.
These safeguards are designed to protect shareholders and the market from governance failures while allowing companies some flexibility in leadership design.
What Companies Need to Do Next?
Since Resolution 24 is already in effect, public joint stock companies must act quickly to comply. Key steps include:
- Review Articles of Association
Companies must check whether their Articles allow combining the Chairman and CEO roles. If not, amendments may be required. - Restructure Boards
To meet the 75 percent independence requirement, some companies may need to appoint additional independent directors. - Establish Governance Committees
A fully independent Governance Committee must be created with a clear mandate for monitoring and reporting. - Prepare Shareholder Resolutions
Any proposal to merge roles must be backed by a justification study and formally presented to shareholders. - Update Disclosure and Reporting
Governance reports and company websites must reflect the new leadership structure and safeguards. - Coordinate Across Teams
Legal departments, company secretaries, and investor relations teams must work together to ensure smooth compliance.
Broader Impact on UAE Corporate Governance
Resolution 24 highlights the UAE’s commitment to aligning with global best practices while adapting rules to local market realities. By combining flexibility with enhanced oversight, the reform strikes a balance between efficiency and accountability.
For companies exploring UAE business setup, this change signals to international investors that transparency, accountability, and shareholder rights remain priorities in the UAE capital markets.
The Role of Business Advisors
For new companies considering UAE company formation, navigating governance rules can feel complex. Business setup services often focus on licensing, structuring, and compliance, but governance is equally important.
Advisors who provide business setup services in the UAE must now integrate governance planning into their offerings, particularly for PJSCs. This includes helping companies anticipate board independence requirements, establish committees, and prepare shareholder communication strategies.
Summing Up
Resolution 24 of 2025 marks a new chapter in the UAE’s corporate governance landscape. By allowing public joint stock companies to merge the Chairman and CEO roles under strict safeguards, it provides leadership flexibility while raising the bar on independence and transparency.
For those considering UAE business setup, this reform is a reminder that governance is central to credibility and long-term success. Business setup services must also support compliance with evolving corporate governance standards.