Sheikh Khalifa issues new law to regulate family business ownership in Abu Dhabi
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Sheikh Khalifa issues new law to regulate family business ownership in Abu Dhabi

Sheikh Khalifa issues new law to regulate family business ownership in Abu Dhabi

The law is not applicable to family-owned businesses where non-family members own more than 40 per cent of shares

UAE President Sheikh Khalifa bin Zayed Al Nahyan, in his capacity as ruler of Abu Dhabi, has issued a new family business ownership governance law to facilitate a smooth transition of businesses between generations.

The new law also aims to further strengthen the family-owned business legislative ecosystem in Abu Dhabi by following a sustainable economic model. The injunction further aims to underpin the contribution of family businesses to the growth of the economy.

 

The latest law empowers owners of family business to: prevent selling of shares or dividends to individuals or companies outside the family, and to require prior approval from family members before a shareholder sells their respective equity stake to a non-family member. Owners of family businesses can also issue family-owned shares with weighted voting rights and prevent the pledging of family-owned businesses as encumbered assets, to evade expropriation.

The current law is not applicable to family-owned businesses where non-family members own more than 40 per cent of shares, Abu Dhabi Government Media Office reported.

The law is applicable to family-owned businesses on an opt-in basis for owners or co-founders by submitting a request to the Abu Dhabi Department of Economic Development (ADDED).

ADDED which will issue the executive and administrative regulations of the new law from March 2022.

Mohamed Ali Al Shorafa, chairman of the Abu Dhabi Department of Economic Development, 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”.

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