Issued by Khalifa bin Zayed regarding the governance of family businesses in Abu Dhabi

A law prohibiting the sale of shares or shares of family businesses outside family members

• The law enhances the contribution of family businesses to economic development.

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• Muhammad Ali Al-Shurafa: “The law provides a legislative framework to ensure the prosperity of family businesses across generations.”

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His Highness Sheikh Khalifa bin Zayed Al Nahyan, President of the State, in his capacity as Ruler of the Emirate of Abu Dhabi, issued a law on the governance of family businesses in the Emirate of Abu Dhabi, to enhance their importance and contribution to economic and social development, and to facilitate the transfer of ownership between successive generations.

The new law aims to develop and strengthen the legislative structure regulating the work of family businesses, and to ensure their reliance on a more flexible and sustainable economic model, in accordance with best global governance practices, by enhancing the contribution of family businesses to diversifying and growing the emirate's economy.

sale and mortgage

The law is distinguished by granting the founders of the family company the power to prohibit the sale of shares or shares to any natural or legal person outside the family, and to issue shares or shares of their own with double voting, with the requirement of the approval of all partners before any partner disposes of his share or sells his shares to a party outside the family. .

The law also provides for the prohibition of mortgaging the assets of the family business or arranging in-kind burdens that may lead to its expropriation.

Applicability of the law

It is noteworthy that the provisions of this law do not apply to companies, if the ownership percentage of partners outside the family exceeds 40% of its total capital. The Department of Economic Development - Abu Dhabi, provided that the department will issue the regulatory and administrative regulations for the Family Business Governance Law in the Emirate of Abu Dhabi, as of March of this year.

legislative framework

The Chairman of the Department of Economic Development in Abu Dhabi, Muhammad Ali Al-Shurafa, said that the Family Business Governance Law is a fundamental pillar to enhance the pivotal role played by these companies in economic development, and provides an integrated legislative framework, to ensure the growth and prosperity of these companies and their continuity across generations, and keep pace with developments in the economic sector. Business, especially with the possibility of attracting strategic partners from outside the family within the limits of 40% of the company’s total capital, which gives it wide possibilities for development and expansion.

He added that family businesses, which have played a vital role in the economic development process for decades, have the ability to continue to contribute to economic diversification and the knowledge economy, with their accumulated experiences and flexibility in dealing with developments, as well as their experiences in partnership with government agencies, and investing in The sectors targeted by the strategic initiatives launched by the Emirate of Abu Dhabi.

• The law requires the consent of all partners before any partner disposes of his share, or sells his shares to a party outside the family.

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