"Economy": a committee to settle disputes in each emirate
The Family Business Law comes into force in January 2023
The Ministry of Economy organized a briefing on the Family Business Law.
From the source
Abdullah Al Saleh: "The UAE is the first in the world to issue integrated legislation for the governance of family businesses."
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Yesterday, the Ministry of Economy announced that the Family Business Law will enter into force next January 2023, pointing out that the law provides the legal framework required to ensure the growth of family businesses, diversify their activities, and facilitate their transmission between generations, in a way that guarantees their continuity beyond the third and fourth generations, through Studied mechanisms and procedures, which support its ability to expand and grow in a sustainable manner, enhance its competitiveness, and develop its business inside and outside the country’s markets.
proactive step
The Undersecretary of the Ministry of Economy, Abdullah Ahmed Al Saleh, said in a briefing about the law that 90% of the total number of private companies in the UAE are "family", and their investments are distributed in the sectors of real estate, retail trade, tourism, industry and technology, and shipping and logistics.
He added that the UAE is the first in the world to issue integrated legislation for the governance of family businesses, pointing out that the issuance of the law is a proactive and distinctive step for the state at the regional and global levels, as there are no other legislations in the world that regulate the work of family businesses in the way that the UAE has done, and this is one of It would consolidate its position as a first and preferred destination for family business investments and projects, regionally and globally.
family charter
Al Saleh stated that the unified register of family companies will be established, under the supervision and follow-up of the Ministry of Economy, to organize the work of family companies in the country, and to benefit from all the advantages stipulated in the law. Ownership, goals and values of the family, mechanisms for evaluating shares, and methods for distributing profits.
Al Saleh explained that the law applies to any family company existing in the country, and the owners who own the majority of the shares in it decide to register it in the unified register, as a “family company.” The law also applies to all commercial companies, with the exception of “public joint stock” and “solidarity” companies. ».
Company ownership
And Al Saleh indicated that the family company takes any of the forms of companies stipulated in the Commercial Companies Law, including the “one-person company”, indicating that the law regulates the ownership of family companies, by determining its capital, how the partner disposes of his share, and the assignment mechanism. In addition to regulating the right of recovery, evaluating the shares and their categories, as well as the family company purchasing its shares.
He also pointed to the abolition of the restriction on the maximum number of shareholders in the family company, when it is in the form of a limited liability company.
Dispute Settlement
Al Saleh revealed that, according to the law, a committee will be formed in each emirate called: “The Family Business Dispute Settlement Committee”, according to a decision of the Minister of Justice, or the head of the local judicial authority, as the case may be, and this is due to the fact that family disputes are one of the most important reasons that lead to Ending the status of the family business, which contributes to the settlement of family business disputes and their resolution by specialized judges or arbitrators, while ensuring speed, confidentiality and efficiency in resolving them.
Dealing with shares
With regard to the shares of the partners, Al Saleh said that if any of the partners wishes to dispose of his share in the family company, he must present it to the rest of the partners from the family, and he will have an exception from that, and in the event of bankruptcy or insolvency of one of the partners in the family company Therefore, reliance is placed on the procedures and controls in force in the “insolvency” and “bankruptcy” laws in force in the country.
He pointed out that the law granted sufficient flexibility for family companies to own any number of partners, and also stipulated that the family company must distribute part of its annual profits at the end of each fiscal year to the partners, according to the percentage of each partner’s share, unless the memorandum of association stipulates. Otherwise.
Buy shares
Al Saleh stressed that the partner in the family company enjoys priority in purchasing shares from other partners in the event of the bankruptcy of one of the partners, indicating that the status of the family company does not disappear with the death, interdiction, bankruptcy or insolvency of one of the partners, as the law grants the right to « The heir”, by remaining in the family company, as a partner to the extent of his share that he inherited, or disposing of his share, and shares in the family company may not be assigned except in accordance with the conditions stipulated in the law.
Remove the adjective
Al Saleh said that the status of the “family company” is removed from the company, if persons outside the family own the majority of its shares that have the right to vote, according to the provisions of the law, and in this case the family company is written off from the unified register, according to a request from any interested party, or by a decision of the competent authority.
And whether it is permissible to sell a share to a foreign investor, Al Saleh affirmed that it is permissible, provided that the approval of the majority of the owners is obtained, and that the investor does not own the majority of the shares.
Regarding the adoption by the emirates of the country of local laws related to family companies, Al Saleh said: “If any emirate wants to cancel the local law and implement the (federal) law, then it is registered in the companies registry to implement it in the emirate,” indicating that there is great flexibility in this regard.
Establishing a "family charter", which includes rules for ownership, goals and values of the family, mechanisms for evaluating shares, and methods for distributing profits.
It is permissible to sell a “share” to a foreign investor, provided that the approval of the majority of the owners is obtained, and that the investor does not own the majority of the shares.
The family business must distribute a portion of its annual profits at the end of each financial year to the partners, according to the percentage of each partner’s share, unless the Memorandum of Association stipulates otherwise.
Supportive initiatives
The Undersecretary of the Ministry of Economy, Abdullah Ahmed Al Saleh, revealed that during the last stage, a number of initiatives were launched to develop the family business sector, most notably the “FB-X” family business platform and the “Thabat” program, with the aim of supporting family business investments, diversifying their activities and entrepreneurial projects. In the fields of the new economy, and to enhance its partnerships and opportunities inside and outside the country’s markets.
He explained that the "Thabat" program has set ambitious goals represented in transforming 200 family projects into major economic companies by 2030, with a market value of about 150 billion dirhams, and annual revenues exceeding 18 billion dirhams.
family business
The law defines a family company as every company established in accordance with the provisions of the Commercial Companies Law in the country, and most of its stakes or shares are owned by people belonging to one family, and it is registered in the Unified Family Companies Register, which is established according to the provisions of the Family Companies Law.
90%
One of the private companies in the UAE is “family”.
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