UAE Issues New Decree Law on Family Businesses and Offices

The UAE Government published Decree Law No. 37 on Family Businesses in the official gazette on October 10, 2022. The New Law will take effect on January 10, 2023, which is three months after it is published.

People are glad that the government passed this new law because it shows that the country is still committed to helping family businesses and organizations. The new law recognizes the important role that family businesses and offices play in the long-term growth of the UAE economy and the fact that they create the most jobs in the UAE.

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Objectives of the New Decree Law

This Decree-Law is being put into effect to set up a comprehensive legal framework to regulate the ownership and management of family businesses, make the legal framework available to all family businesses and make it easier for them to succeed across generations, make sure that family businesses stay in business, promote the role of the private sector in the growth of the national economy and its contribution to the community, set up committees to settle family business-related disputes, and make sure that the legal framework is accessible to all family businesses.

The New Decree Law also sets out the best ways for family businesses to be passed down from one generation to the next in terms of ownership and control. The New Law also gives family businesses more help from the government.

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Key Features of the New Decree Law

• All family businesses were told by the government that they had to keep a single register.
• Conditions for being able to apply for registration on the register for the family office in the UAE
• Set that the new law would apply to all companies set up under the Federal Companies Law or other laws in the Freezone, except for public joint stock companies and general partnership companies.
• Introduced two types of shares, one with voting rights and the other with profit-sharing rights, as agreed between family members.
• Set up rules about how shares can be transferred between members of the same family and between people who are not related.
• Measures were put in place to stop existing shareholders from selling their shares to people outside the company.
• Introduced a family charter as part of the new law to help family members agree on important things like how to share profits and what education, training, and qualifications family members need to have.
• Encouraged and outlined different tools for family office structures and governance, such as the family council, family assembly, and family constitution, to help family businesses succeed.
• Set up a “Committee for the Resolution of Family Business Disputes” in each Emirate. This was decided by the Minister of Justice or the head of the local judicial authority.
• Set up the structure and process for resolving family business disputes. A judge will be in charge, and two experienced and qualified people in the legal, financial, and family business management fields will help.
• Family shareholders’ insolvency and bankruptcy were regulated.

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What HR procedures do I contract out?

The New Law is seen as a good thing for family office regulations in the UAE because it covers things that hadn’t been covered before. The new law may not be a cure-all for all problems with family businesses and offices, but it does deal with most of the problems and challenges that were not dealt with well enough in the past in order to make sure that family businesses and offices in the UAE keep running.

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