UAE is one of the best areas to start your own business. Hence, there are now several laws that work for your benefit. Hence, there are numerous family businesses as well which need the rise. Therefore, the new law’s purpose is to improve the economic impact of family-owned businesses in the country. It also encourages more companies from the UAE to establish their operations there. Hence, the Federal Decree-Law No. 37 on family businesses (new business family law UAE) will work. To improve and enhance the country’s family business climate, the UAE government passed this legislation. You can always get help from lawyers in Dubai to suit your needs.
The legislation will soon start to work in January 2023. Therefore, it will give family businesses a legal basis. They can grow, diversify and ensure the continuity and longevity of their families. There is a higher scope of family businesses because they come with several benefits, one being continuity. Therefore, it is a must to give them a rise as well. Moreover, UAE is a safe place for all types of businesses. It also has Advocated in Dubai to assist you further. Family businesses are a vital economic development tool in many countries. They are crucial in the creation of new businesses, attracting investments, and creating employment opportunities in many industries. Therefore, this law will have a great application to everyone who owns and wants to start a family business.
What is the UAE’s New Family Business Law?
A family company is defined as a business that was established under the Companies Law. It is also registered in the Ministry of Economy’s special register of family businesses. The majority of shares in the company are owned by the same family members. This is another significant benefit that the family gets because the usual claims are within the family. Hence, it is a great investment opportunity for everyone to start their own family business. It is now easy to start in UAE because of the new laws and safety, which is always assured.
A family business is one in which the majority of shares are within the hands of a single family. The establishing process of this law is according to the country’s Commercial Companies Law. It must include in the unified family company registration. That is because it is a law that is going to be working from the start of the year. Hence, it is vital thing that everyone knows about the laws as well as the changes that are happening. This will keep everyone on track and ensure they are taking the right step by knowing the rules. This is according to the laws of the legislation. It is important that you follow the rest of the family laws as well and consider them before moving on. Here are some notable provisions of decree-most laws:
- The Ministry of Economy will oversee and monitor the creation of a unified family company registry.
- All family-owned businesses throughout the country are subject to the legislation. All commercial enterprises, except for solidarity and public firms, must adhere to the law.
- It regulates the ownership of family businesses by defining the capital and how each partner sells it. Then, the legislation also regulates the waiver process. It governs redemption rights, appraisals of shares and their categories, and the acquisition of shares by a family business.
- The limitation on the maximum number of shareholders will lift when the family business is set up as a limited liability corporation.
- In each emirate, establishment of a “Family Business Dispute Resolution Committee.” Because conflicts are one reason family businesses close down, it is important to establish this committee.
- The legislation provides several options for controlling the family business, by director or board of directors.
- This legislation clarifies that all family members must be notified by each other if they wish to sell their interest in the family business.
- Unless otherwise provided in the articles of incorporation, the family company shall pay a portion of its annual earnings to its shareholders after each fiscal year. This is based on each partner’s percentage ownership of the family business.
- If a majority of the shares of the company are by non-family members who have the legal right to vote, the company is removable from its identity as a family business.
- A family business does not cease if one of its partners dies, is imprisoned, files for bankruptcy, or becomes insolvent.
- The law allows the heir to choose to sell or remain as a partner in a family firm up to the amount of the inherited share.
- The law does not allow the transfer of shares in the family business unless certain requirements are met.
- If one of the family partners files for bankruptcy, the other partner can refuse to buy their shares.
Gulf Advocates will assist you.
The UAE has made extensive efforts to establish a road map for family businesses in the UAE. It also aims to increase its operations in different economic and commercial spheres, especially those that are related to the new economy. During the initial phase of the legislation, the Ministry of Economy worked with the relevant federal agencies and family companies in UAE. This resulted in harmony and coordination of national efforts. Therefore, if you are in need to understand the laws more, we are here to help you out in all circumstances.