Aurora50 Loader
Aurora50 Logo
SUBSCRIBE TO OUR NEWSLETTER EMAIL
  • Linkedin Logo
  • YouTube Logo
  • Instagram Logo
  • Facebook Logo
  • Twitter Logo

New UAE governance law for family businesses announced

Abu Dhabi Media Office tweet about new family businesses ownership governance law25/01/22
Suzanne Locke 25 January 2022
News
Share
A new governance law has come into effect for family businesses in the UAE, which account for 90 percent of private companies.
The family business ownership law was announced in January by Sheikh Khalifa bin Zayed Al Nahyan, the UAE President and Ruler of Abu Dhabi.
Its aim is to “further strengthen” the sector’s contribution to “the diversification and growth of the economy” and ease “the transition to successive generations” with a “more flexible and sustainable business model”, the Abu Dhabi Government Media Office reported.

Prior approval from family partners

The new law prevents selling shares or dividends of family-owned businesses to individuals or companies outside the family, and requires prior approval from family partners before a shareholder sells an equity stake to a non-family member.
Owners of family businesses can issue family-owned shares with weighted voting rights and prevent the pledging of family-owned businesses as encumbered assets, to avoid expropriation.
The current law, the statement said, is not applicable to family-owned businesses where non-family members own more than 40 per cent of shares.

Allows some ownership by non-family members

HE Mohamed Ali Al Shorafa, chairman of the Abu Dhabi Department of Economic Development (ADDED), said: “This law is a major pillar in enhancing the vital role played by these businesses in driving economic development.
“It also provides a legislative framework to ensure the growth and sustainability of family-owned companies in line with the evolving business sector, since it allows ownership by non-family members up to 40 per cent of the capital.
“This will support the expansion and development of family-owned businesses.
“Family-owned businesses in Abu Dhabi continue to contribute to economic diversification and the knowledge-based economy, equipped with decades-long experience in the market, strong resilience, and experience in partnering with government entities, as well as investing in sectors targeted by strategic initiatives launched by the emirate of Abu Dhabi.”
The provisions of this law are applied on an opt-in basis for owners or co-founders, the statement said, and they can apply by submitting a request to ADDED, which will issue the executive and administrative regulations of the new law from March 2022.

Related posts

  • First Abu Dhabi Bank (FAB) building

    MSCI upgrades FAB to ESG leader

    Investment research firm MSCI upgraded First Abu Dhabi Bank’s (FAB) environmental, social responsibility and governance rating from A to AA in April, putting it in the ‘leader’ category – in part due to the bank joining Aurora50 as a corporate partner for the Pathway20 boardroom accelerator programme.

  • All companies signing the UAE’s SDG 5 pledge

    Since 2022, UAE private-sector companies have been pledging to put women in 30% of leadership roles. Find the full list of companies here.

  • Graphic contains Aurora50 logo and headline All the UAE's IPOs since 2022, plus a button 'download free tracker (.xls). Logos displayed in graphic are for Salik, DEWA (Subai Electricity & Water Authority), AD Ports Group, Borouge, Americana, ADNOC Gas and Pure Health.

    The UAE’s 2022 IPO mega-listings 📈

    IPOs mean more women for boards: here are some of the biggest in the UAE this year, from AD Ports Group to Borouge to DEWA.