UAE’s new family business law to come into effect in January

The new family business law, which aims to boost the contribution of family companies to the country’s economy and invite more enterprises to start up in the UAE, will go into effect in January, according to the Ministry of Economy.

The family company law is an important step forward in the creation of legislation governing the ownership and control of family companies in the UAE.

Upon its coming to force in January 2023, it will provide the legal framework required to ensure the growth of family businesses, help diversify their activities, and facilitate their continuity and longevity through generations

Several pioneering efforts, most notably the FB-X family business platform and the ‘Thabat’ program, were introduced in the last phase to grow the family business sector. These are especially designed to help family businesses diversify their operations, launch pioneering ventures in the new economy, and expand their connections and prospects both inside and beyond the country.

These firms operate in a variety of industries, including real estate, retail, commerce, tourism, industry, technology, shipping, and logistics.

The UAE this year launched a Programme to double family-owned businesses’ contribution to the nation’s gross domestic product to $320 billion by 2032 by preparing them for the future economy.

Key highlights of the new family business law

♦ A family-owned business may take any form of company stipulated in the Commercial Companies Law, including a one-person company.

♦ The law establishes a set of mechanisms for managing the family business, whether by the director or the board of directors, with clarification on the most important terms of reference and obligations of the director and how to dismiss him.

♦ Formation of a committee in each emirate called the “Family Business Dispute Resolution Committee”, pursuant to a decision by the Minister of Justice or the head of the local judicial authority. This is since disputes are one of the main reasons that lead to the termination of family businesses.

♦ The law clarifies that in the event of bankruptcy or insolvency of one of the partners in the family business, the procedures, and controls in force in the insolvency and bankruptcy laws in force in the country must be followed.

♦ The law grants sufficient flexibility for the family business to have any number of partners.

♦ The law states that a family business does not cease to exist due to the death, interdiction, bankruptcy, or insolvency of one of the partners.

♦ Shares in the family business may not be assigned except in accordance with the conditions stipulated in the law.

♦ A partner in the family business has the priority right to buy the shares of the other partners, in the event of the bankruptcy of one of the fellow partners.

Why to start business in Dubai, United Arab Emirates?

Dubai is one of the globe’s most connected cities and is a great place for business. The Dubai, known as the “portal to the world,” has flourished for centuries on its East-West linkages and is located at the intersection of the Asia, Africa, and India triangle. Its geographic location has historically permitted simple linkages, business networking, and trade access.

Dubai has grown into one of the world’s top venues for business creation in the modern era. The city provides several corporate benefits, including:

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