Ministers and officials underline importance of the new family business law

Law to play key role in the growth and prosperity of family businesses and the diversification of their activities in new economy sectors

Ministers and officials in the UAE highlighted the importance of Federal Decree Law No. 37 of 2022 on family businesses and its key role in promoting the growth and prosperity of family businesses in the country’s markets. It will ensure their sustainability and help diversify their activities in various business sectors, especially in the field of new economy, and enhance the country’s attractiveness before family businesses from around the world, thus strengthening the UAE's position as a destination for local, regional and international family businesses to flourish.

H.E. Bin Touq: The law a new milestone in the country’s efforts to enhance the competitiveness of its business and investment environment

H.E Abdulla Bin Touq Al Marri, UAE Minister of Economy, said: “The Federal Decree Law No. 37 of 2022 on family businesses, issued by the UAE government, is a new milestone in the country’s efforts to enhance the competitiveness of the national business environment. It strengthens the UAE’s position as a primary and preferred destination for business and investment through the adoption of pioneering initiatives and the launch of progressive legislation in light of its objectives for the next 50, and in implementation of the wise leadership’s directives.

H.E. underlined that the family business sector has been and continues to be a major partner in the country’s development; is a major contributor to the GDP, and offers many promising opportunities. Therefore, supporting this vital sector’s growth is one of the government's priorities, and the Ministry of Economy is working in cooperation with its partners to develop a comprehensive program to stimulate and develop family investments in the country. From this standpoint, a unique law was drafted for this kind of business model in accordance with the best practices followed globally, and to ensure the provision of all enablers and a suitable environment for the prosperity of their operations. The new legislation is designed to ensure the continuity and success of these businesses over successive generations, in a way that enhances the position of the UAE as a sustainable destination for family businesses from all over the world.

H.E added: “The law establishes a comprehensive and easy framework to regulate the ownership and governance of family businesses in the country, facilitate their transfer between generations, support the continuity of their business, and provide appropriate mechanisms to resolve disputes related to family businesses. It takes into account all aspects and challenges that may stand in the way of the development of family businesses in the country, starting with the founding contract of the family company, and development of the family charter, which lays down the rules of ownership, mechanisms for evaluating shares and methods for revenue distribution. In addition, it addresses dispute resolution of family companies, and establishes other rules regulating the ownership of such businesses. These include the regulation of partners’ disposition of their shares as well, and  the management of the family business, competences, powers and obligations of the manager, and governance of family affairs in relation to their relationship with the company.

H.E indicated that the Ministry of Economy will continue its efforts, in cooperation with its strategic partners at the local and global levels, to implement the law, which also represents a major step forward in the country’s efforts to attract national and foreign investments in the family business sector. This represents one of the main pillars of the new economic model of the UAE, which is based on knowledge, innovation and creativity.

Sultan Al Jaber: The family businesses law is in line with the leadership's vision to support the private sector and enhance the performance of industrial companies

H.E. Dr Sultan bin Ahmed Al Jaber, UAE Minister of Industry and Advanced Technology, confirmed that Decree-Law No. 37 of 2022 on family businesses is in line with the vision of the wise leadership aimed at making major strides in comprehensive and sustainable economic development and strengthening the UAE’s position as an attractive destination for investors locally and internationally. The law reflects the attractive investment environment offered by the country, especially since a large share of private companies in the UAE are family businesses, some of which operate in the industrial and manufacturing sector.

H.E said: "The new decree supports the efforts of the Ministry of Industry and Advanced Technology to develop the work environment for industrial companies and consolidate the UAE's position as a leading destination for future industries, especially since family businesses represent a major pillar of the national economy."

H.E added: “The law will encourage family businesses to develop their businesses and explore expansion towards knowledge-based activities and future sectors such as artificial intelligence, advanced technology, renewable energy, and other vital sectors. This in turn contributes to enhancing the performance of industrial companies, as industry and advanced technology provide many promising opportunities, enablers and incentives in light of the national strategy for industry and advanced technology. Other strategic initiatives and programs were also launched, such as the National In-Country Value Program (ICV) and the ‘Made in UAE’ initiative and the fourth industrial revolution program ‘Industry 4.0’ that promote growth, expansion and digital transformation and enhance the competitive position of such companies.

H.E. Al Zeyoudi: New law reflects the country’s keenness to support and develop family businesses as one of the main pillars of the UAE’s new economic model

H.E Dr. Thani bin Ahmed Al Zeyoudi, Minister of State for Foreign Trade, affirmed that the new family business law reflects the UAE's keenness to support and develop this vital sector as one of the main pillars of its new economic model, in light of the goals and principles of the 50 and the determinants of the UAE Centennial 2071.

H.E. said: “The family business sector holds many promising opportunities, and the issuance of an integrated law that regulates the operations of this important sector and ensures the sustainability of its activities across successive generations will contribute to supporting the gross domestic product. It will attract foreign family investments to the country, and establish the UAE’s position as a preferred hub for family business investments from around the world. This in turn will contribute to enhancing the global competitiveness of our national economy, increase its flexibility, and will create more job opportunities.”

H.E added: "Many of the world's successful brands are owned by family businesses and are pioneering models that invest in a wide range of vital economic activities, including sectors of the new economy. Therefore, the UAE worked on developing integrated policies for this type of a promising economic model, ensuring the creation of an encouraging environment for doing business and addressing the challenges that may hinder their development and growth across successive generations. The law will help sustain its investments in the various economic sectors that the country seeks to direct FDI to in a way that supports the achievement of sustainable social and economic development goals of the UAE.

H.E. pointed out that the country continues to provide all legislative and regulatory support for family businesses in the country in order to enhance their competitiveness locally, regionally and globally and help expand their activities towards the sectors of the new economy.

H.E. Omar Al Olama: The new law contributes to organizing the ownership and governance of family businesses in the country, supports their stability and enhances their role as an integral part of economic development

H.E Omar Bin Sultan Al Olama, Minister of State for Artificial Intelligence, Digital Economy and Remote Work Applications, stated that the UAE government is keen to empower the private sector, encourage entrepreneurship, and diversify sustainable investment activities in the country to support development, create new and promising opportunities, and enable family businesses to contribute to advancing the future economy.

H.E Al Olama said: “The family business law contributes to regulating the ownership and governance of family businesses in the country, supports their stability and enhances their role as an integral part of the economic development journey.” He pointed out that these companies, as private sector, support economic growth and create an attractive environment for domestic and foreign investments in the country. They are playing key roles in building the best economy for the country based on integration and flexibility and driving GDP growth in line with the goals of the 50.

Mohamed Bin Hadi Al Hussaini, Minister of State for Financial Affairs

For the Ministry of Economy’s press release about Federal Law No. 37 of 2022 on Family Businesses

His Excellency Mohamed Bin Hadi Al Hussaini, Minister of State for Financial Affairs, emphasised the importance of the Family Business Law, noting that it is a key pillar that supports the local economy, due to the flexibility and benefits it offers to family businesses operating in the country. His Excellency also noted that it plays a pivotal role in providing the necessary legislative and legal protection to conduct economic and commercial operations.

His Excellency Al Hussaini said: “The Family Business Law contributes to enhancing the UAE’s competitiveness as a preferred destination for family business investments. This, in turn, helps in bolstering the country’s business, trade and investment environment and accelerating the growth of our national economy to be the largest, fastest growing and most developed in the world.”

H.E. Abdul Aziz Al Ghurair, Chairman, Dubai Chambers

On the issuance of the Family Business Law

His Excellency Abdul Aziz Al Ghurair, Chairman of Dubai Chambers, said: “The Family Business Law marks a significant leap forward in efforts to support the business community, and reflects our wise leadership’s vision to establish a developed business environment that keeps pace with rapid global economic developments. The new Law embodies the strategic partnership between the public and private sectors, and underlines the government’s commitment to supporting family businesses and empowering them to play their part and make significant contributions towards economic development. It also lays the groundwork for a legal system that encourages business growth and development, boosts the business community’s competitiveness, and embraces family businesses from all around the world.”

“The Family Business Law was born out of collaborative efforts between federal and local authorities; it reflects both sides’ commitment to achieving the UAE’s strategic objectives, plans, and visions, the latest of which being ‘We The UAE 2031’,” H.E. added. “The Law is an advanced step towards ensuring the continuity and sustainability of family businesses, safeguarding their advancements, and ensuring a seamless transfer of ownership and leadership from the founders to successive generations, swiftly and amicably settling disputes related to family businesses, and promoting corporate governance. It also serves to cement the UAE’s status and reputation as a global destination for business, as well as a leading centre for local, regional, and international family businesses.”

H.E. Al Ghurair stressed the notable role the new Law plays in enhancing investor confidence and providing agile solutions for family businesses in facing current and future challenges. “The Dubai Chamber of Commerce is committed to supporting family businesses through the Dubai Center for Family Businesses, which it oversees,” H.E. asserted. “The Centre is set to play a critical role in the future, providing all manners of support to family businesses to ensure their continuity and the sustainability of their performance, in line with the vision and directives of the UAE’s wise leadership.”

H.E. Abdullah Al Saleh: The law facilitates the practice of family business in the country within a safe and sustainable environment

H.E. Abdullah Bin Ahmed Al Saleh, Undersecretary of the Ministry of Economy, said: "The family business law will facilitate entrepreneurship in the country within a safe and sustainable environment. It will provide them all growth enablers; especially since the UAE government sees this sector as a priority, and strives to increase its contribution to the country's GDP in line with its goals for the next 50 years, and in implementation of the vision of the wise leadership.

He added: "The UAE is proactive in enacting flexible legislation that enhances the right environment for the growth and development of businesses, and the law takes into account the governance of family businesses and ensures their smooth transmission between successive generations in accordance with international best practices. It also provides integrated legislative support that helps family businesses overcome the challenges they face, including those that ensure their continuity, by regulating matters related to ownership and settling disputes related to it. In addition to that, it includes, for the first time, flexible mechanisms that regulate the relationship with the Commercial Companies Law and the Bankruptcy Law, that are available to family companies registered in the Family Business Registry, which will contribute, in general, to enhancing their contribution to development the country’s economy."

H.E underlined that the family business law opens a new chapter in the developmental legislative frameworks adopted by the country in order to support and enable modern business models that add value to the national economy. It ensures the enhancement of their competitiveness in a sustainable manner, he said, explaining that the country continues to enable such models and provide all the necessary tools to expand and diversify their activities.

The Undersecretary of the Ministry of Economy indicated that a series of consultations and comparative studies were done with developed countries in the family business sector during the preparation of the law. Its provisions were also discussed in the Federal National Council to ensure the creation of integrated legislation in accordance with the best practices followed globally and in line with the goals of the country. H.E further extended his gratitude to all those involved in the development of this law, especially the Family Business Council Gulf.

H.E. Abdullah Al Owais: The law enables family businesses to pass on their achievements to next generations and offers them stability

Meanwhile, H.E Abdullah Al Owais, Chairman of the Board of Directors of the Sharjah Chamber of Commerce and Industry, said: Decree-Law No. 37 of 2022 on family businesses is key to fortifying family businesses to preserve the continuity of their gains and provide foundations of stability to them. It provides them with legislative support and a regulatory framework and enables them to successfully pass on businesses from one generation to the next. This law also enhances the role of the private sector in contributing to the economic and social growth of the country.”

H.E added: "The law shows the extent of the UAE government's keenness to create an integrated legislative system aimed at developing the business environment, the country's capabilities and its economic position in accordance with global shifts, especially those related to organizing governance rules, protecting the rights of partners and shareholders, supporting FDI flows and promoting corporate social responsibility. This strengthens the UAE’s position as the foremost and preferred destination for family businesses and investments, in implementation of the directives of the wise leadership, and in line with the goals of the fifty and the determinants of the UAE Centennial 2071.”

Essa Kazim: A comprehensive law regulating the governance of family business activities

“DIFC fully endorses the UAE Government’s decision to introduce law relating to family businesses, given the prominent role they play in accelerating the growth of the country’s economy. Building on close to 20 years of supporting family businesses, DIFC recently announced the world’s first Family Wealth Centre which aligns with the new federal law. The Centre will help local family businesses manage their wealth effectively and also attract foreign direct investment from those looking to access the region through Dubai and the UAE

H.E. Abdul Aziz Al Nuaimi: The law gives more flexibility to family businesses to ensure growth and prosperity of their activities in the right environment

H.E Abdulaziz Ibrahim Ali Al Nuaimi, Assistant Undersecretary for the Commercial Affairs Regulatory Sector, emphasized that the new family business law gives greater flexibility to family businesses, ensuring that their activities grow and prosper in an appropriate environment that provides all growth enablers. It addresses various issues that may affect the continuity of family businesses and the stability of their businesses over successive generations, and is seen as a significant step forward in organizing and regulating the ownership of family businesses by defining its capital. It also establishes how partners can dispose of their shares, and the mechanism for waiving them, in addition to regulating the right of redemption and evaluating shares and their categories, as well as the family company’s purchase of its shares.

He added: "The law will support the UAE's position in global competitiveness indicators, contribute to the development of the business climate for family businesses, and stimulate FDI inflows, which will ensure the sustainability of the national economy and enhance its flexibility and global competitiveness in light of the 50 goals and determinants of the UAE Centennial 2071."

Mohammad Ali Rashid Lootah, President and CEO of Dubai Chambers, on the issuance of the Family Business Law

Mohammad Ali Rashid Lootah, President and CEO of Dubai Chambers, said that family businesses are an essential pillar of economic growth in the UAE as they play an important role in driving the development of the country over the past decades. They have significantly contributed to raising competitiveness within the business community.

Lootah pointed out that the issuance of the Family Business Law signifies a progressive advancement in the development of legislation and the legal system in the country, keeping pace with the rapid changes of doing business, while enhancing the country's position as a destination for family businesses of all sizes. He highlighted that the law will be a strong impetus in promoting UAE as a competitive business environment and a global hub for finance and business.

The President and CEO of Dubai Chambers added, “The law focuses on preserving the continuity of family businesses, supporting their sustainability and growth, while adopting the best governance standards to ensure that family businesses are ready for the challenges to come. It is a clear indication of the country’s wise leadership and its commitment to providing a stable environment for family businesses and preparing them for the future.”

The family business law, which will come into force at the beginning of next year, is a modern and resilient piece of legislation that is carefully developed with a view to make family businesses of all types and sizes an essential part of the country’s economic plans for the next 50 years, he added.

Lootah highlighted the important role played by the Dubai Chamber of Commerce in developing a legislative infrastructure that stimulates growth, supports, and protects family businesses.

Dr. Raja Easa Al Gurg: The new law represents a comprehensive legal performance to regulate the affairs of family businesses and supports their growth and prosperity

The newly issued family companies’ law, which will come  into force in January 2023, is an integral part of the UAE’s plan to set legislative priorities and create  an environment attractive to foreign direct investment. According to the Easa Saleh Al Gurg Group, through this law, investors can establish their own family business in the United Arab Emirates and safeguard  its  continuity.

Dr. Raja Easa Al Gurg - Chairperson and Managing Director of Easa Saleh Al Gurg Group said, "The issuance of Decree Law No. 37 of 2022 for family companies is the first of its kind in the world, and  a quantum leap in the governance of family businesses. Given the unique characteristics  of family businesses and their need for stability and continuity over  generations; the issuance of  this law offers comprehensive legal measures  to regulate  and support their  growth.

She added, "Family businesses have made tangible contributions to our national economy, as their origins and growth have been in conjunction with the progress of the United Arab Emirates. It was therefore necessary to find ways to safeguard these businesses  and enhance their role within the UAE. This support from the government will encourage investors from all over the world to establish their family business in the UAE, and benefit from its strong legislative environment and diversified economy.

The Easa Saleh Al Gurg Group one of the foremost family businesses in the UAE, earlier this year announced the appointment of Dr. Raja Easa Al Gurg as the new Chairperson in accordance with the charter that was previously approved for implementation after the demise  of the Group’s  Founder, Easa Saleh Al Gurg. The charter ensured  the smooth transition of management and  integrity  of the Group as well as its founding principles.

Essam Al Tamimi: The law provides the necessary flexibility to families in managing their own affairs, arranging the management of their businesses, and ensuring their sustainability

Attorney Essam Al-Tamimi, Chairman of the Board of Directors of Al-Tamimi & Associates, said:

Reflecting the UAE’s commitment, under its wise leadership, to providing a stable and innovative environment for family companies in the country, and as part of ongoing efforts to promote and support business continuity and enhance the role of family companies in economic growth and social contribution, the UAE has issued Federal Decree-Law No. 37 of 2022 on Family Companies. Federal Decree-Law No. 37 of 2022 on Family Companies is a first of its kind, not only at the State’s level, but regionally as well. The Law provides an integrated legal framework for families to organize their affairs, protect their businesses and assets, and ensure business continuity across

generations in a positive and stable environment. The Law provides the necessary flexibility to families in managing their affairs, arranging the management of their businesses and ensuring their sustainability in a way that serves the interest of family members and strengthens the economy of the State. To this end, the Law regulates several key matters and provides exceptional benefits and incentives for the continuity and stability of family companies. The Law has not established a new form for the family company, rather family companies can take the same forms already in place in the UAE under the Commercial Companies Law, with the exception of public joint stock companies and partnerships, or in the free zones as per their own legislation.. The Law gives family companies the right to adopt a family constitution in order to regulate the governance of family affairs related to the family company. The Law also establishes other bodies such as the family assembly, the family council, and the family office, each entrusted with specific tasks, to regulate family governance and the family’s relationship in relation to the family company. In a positive development, the Law allows the partners of a family company to have equal or different rights with respect to dividends, management, and other rights and benefits. The Law also gives a family company the right to purchase its own shares as a means of protecting family companies while providing the necessary flexibility and a variety of solutions to families. In order to protect the family enterprise and to ensure that the shares in the family company remain within the family, the Law provides strict controls and procedures on the disposal of shares to non-family members. In view of the disruption that intrafamilial conflicts often cause in the management of the family company and the negative impact this in turn has on the business and the conduct of its affairs, the Law sets out various flexible mechanisms and options for resolving disputes that arise between family members and partners, and between them and the family company consequently family members will have more trust and feel secure. Additionally, the Law provides a unique provision to the effect that no claim that a disposition of shares and assets of a family company is contrary to the Personal Status Law shall be recognized insofar as the disposition took place during the lifetime of the disposing partner. The Law is a positive affirmation of the continuous efforts being made by the UAE’s wise leadership to support the family business sector in the country, given its role in economic growth of the UAE and the region in general, and to consolidate and strengthen the UAE’s position as an ideal and flexible destination for family businesses and investments, in line with the goals of the UAE Centennial 2071.