Law of Familial Companies in UAE
In view of the Emirati Legislator’s desire to strengthen the role of familial companies in economic growth in the country, the new Law was promulgated by Decree No. 37 of 2022, on 3 October 2022, to revoke any provision that contravenes or conflicts with the provisions of this Federal Law. This Law entered into force four months from issuing the Law on 4 January 2023, to be applied to any existing company that are considered familial under the provisions of this Law (except for joint stock companies and Solidarity Companies) and the shareholders of most shares shall decide to register it in the Unified Register Record as a familial company.
This Law defines familial companies in its first article as: “the companies established upon the provisions of Companies Law and most of its shares or stocks are owned by members of one family, also the company shall be registered in the Unified Familial Companies Registry in accordance with this Law provisions and under the supervision of the Ministry of Economy.”
Familial Companies Law shall be established by an indicative contract concluded by the concerned Ministry, moreover, there may be an agreement on the values, objectives, experiences, and requirements, which shall exist in such companies and the agreement’s clauses, shall revoke any clause in contrast with it in the company’s Memorandum of Association.
Additionally, the number of shareholders/partners of familial companies has no limits but its capital and the mechanism of waiving the shares or selling them shall be specified and stipulated according to the Law. Further, the Minister of Justice or the competent national judicial authority for the sake of settling any kind of dispute concerning such companies to reduce the causes of its dissolution or liquidation shall form a committee named “Committee of Family Companies Dispute Resolution”.
This Law also regulates the provisions of kind of the company and its removal from the competent register, such as privileging the inheritor the right to sell the inheritance or to be a partner in accordance with his/her shares’ value and prioritizing the partner in purchasing the shares of the bankrupt partner or shareholder.
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