“In most cases, family businesses are stronger because of the complementary skills of their members”– Bernard Kliska
‘FAMILY COMPANIES IN UAE‘ owned businesses continue to grow and contribute to the UAE economy. These businesses are usually more stable and committedowned businesses continue to grow and contribute to the UAE economy. These businesses are usually more stable and committed. Due to longevity in leadership, their history and experience help them to face new challenges with confidence. These businesses do futuristic planning which eventually helps them in surviving sudden economic crises. The authorities also try to set the seal, through laws and rules, on the development of these family companies and recently enacted Decree-Law No. 37 of 2022 is a testament to this.
The new Law has been enacted by keeping the following objects in mind: to have a complete legal framework for ownership and governance of family companies, to have international governance practices imbibed in national laws, to have a hassle-free process for passing down business to successive generations, and to have a specific dispute resolution mechanism for these companies.
Does a Family company have perpetual existence?
The general rule is that the death, bankruptcy or insolvency of a partner will not affect the competency of these companies, but the members of the entity can have an agreement on the contrary.
Application of the Law: The new decree will be applicable to both existing and future family companies except the Public Joint-Stock Companies and General Partnership Companies. Registration of family companies will be done in a special register. This register will be maintained in all the Emirates for the convenience of the applicants.
New addition!
The family Constitution is a document that will be very useful for these Companies as it can be drafted to have important pre-emptive declarations in writing. It is to be kept in mind that if the contents of MOA and the Family Constitution are not in harmony, the latter will take a backseat.
Dispute settlement mechanism
A special council can be constituted by adding its provision in the MOA or Constitution for deciding the matters in dispute. This council can have family members, partners or even third parties as members. In case no provision is made for the council or the council fails to reach any consensus on the matter before it, the dispute will be adjudicated by the Family Companies Dispute Resolution Committee.
In 2020, Law No. 9 regulating family-owned businesses was enacted in the Emirate of Dubai. The law established a special committee for settling the ‘Family Property Dispute’ and aimed to encourage people to continue their family ownership of business property.
Conclusion
This new Decree provides a standardised legal framework for family companies. It is to be noted that where the present Law is silent, the provisions of Commercial Companies Law and other local laws will become applicable. BSB legal consultants is a specialized law firm in Dubai having an army of experienced corporate lawyers who will take care of all the legal requirements, provided under the provisions of the laws and their amendments, on behalf of the clients.
With assistance from the best FAMILY COMPANIES IN UAE, set up your dream business in UAE now! Provide us with some documents and information, and you are good to go! For free legal consultation, contact info@bsb.legal or call on +971 508014003.