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Sheikh Mohammed outlines new law for family-owned businesses in Dubai

Sheikh Mohammed outlines new law for family-owned businesses in Dubai

The validity of a family ownership contract can extend up to 15 years, after which it must be renewed

Sheikh-Mohammed Dubai

Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, has issued a new law to regulate family-owned businesses in Dubai.

The law pertains to matters of tenure of ownership, wealth distribution, and the role of government entities in the formation of family-owned enterprises.

The newly issued Law No. (9) of 2020 states that the validity of a family ownership contract can extend up to 15 years.

It can be renewed for another 15 years if all the concerned parties agree to do so.

For the family ownership contract to become legally binding, all parties of the contract must be members of the same family and have a single common interest.

Also, the contract must clearly define the share of each member, and parties of the contract must own all the legal rights of the monies and assets that are covered under the contract.

Additionally, that contract must also be duly attested by the notary public according to the rules and regulations stipulated in Law No. (4) of 2013 concerning Notaries Public in the Emirate of Dubai.

The law further regulates the articles of the family ownership contract, the business structure and management, the formation of the board, the authorities and responsibilities delegated to the board and management as well as the management’s powers and limitations, noted a statement on the ruler’s website.

It defines the responsibilities and authorities of government entities with regard to facilitating the formation of family-owned businesses.

The law is optionally applicable to existing and new family ownerships, including corporate equity securities and proprietorship.

However, excluded from this law are family ownership in public joint stock companies and movable and immovable property.

In May, family-owned businesses in Dubai petitioned the government to adopt measures to offset the impact on their businesses as a result of the Covid-19 pandemic.

Read: Dubai family businesses seek VAT cut and government help to repatriate expat workers

The set of 14 recommendations outlined in a letter by the head of Dubai’s Chamber of Commerce & Industry included reducing value added tax and the request to subsidise payment of salaries in companies that were impacted by the prevailing shutdowns at the time.

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