UAE Ministry of Economy introduces new family business law
The UAE Ministry of Economy introduced the Federal Decree Law No. 37 of 2022 on family businesses, which forms part of the comprehensive and the long-term program adopted by the UAE government to enhance and raise the family business environment in the country to globally competitive levels.
H.E. Abdullah Bin Ahmed Al Saleh, Undersecretary of the Ministry of Economy, confirmed that the UAE attaches great importance to the family business sector and is aware of this vital economic model’s significance in sustainable development.
HE Al Saleh underlined that the new family business law issued by the UAE government is a significant milestone in the development of legislation regulating the ownership and governance of family businesses in the UAE. Upon its entry into force in January 2023, it will provide the legal framework required to ensure the growth of family businesses, help diversify their activities, and facilitate their continuity and longevity through generations. The third and fourth are through well-studied mechanisms and procedures that support family businesses’ ability to expand and grow in a sustainable manner, enhance their competitiveness and develop their operations in local and foreign markets, in accordance with the goals and projects of the 50 and the determinants of the UAE Centennial 2071.
In the UAE, 90 percent of the total number of private companies are family businesses, and their investments cover the sectors of real estate, retail trade, tourism, industry, technology, shipping and logistics services. Family-owned companies in the GCC countries are relatively young, ranging in age between 40 to 60 years, and generate an annual revenue of nearly USD 100 billion, and 50 percent of the owners of these companies include five shareholders or less.
A number of pioneering initiatives were launched in the last phase to develop the family business sector, most notably the FB-X family business platform and the 'Thabat' program, specifically designed to support family business investments, help diversify their activities and establish pioneering projects in the areas of the new economy and strengthen their partnerships and opportunities both inside and outside the country.
The Undersecretary explained that the issuance of the law is a proactive step for the UAE at both regional and global levels as it is a pioneering and distinguished legislation in the field. He pointed out that the law forms part of the UAE’s comprehensive efforts to outline a roadmap for the growth and prosperity of family businesses in the country and strengthen their operations in various economic and commercial fields, especially in the sectors of the new economy.