WHAT DOES THE NEW LAW STATE?

According to the law, a family-owned company is a company established in accordance with the provisions of the Commercial Companies Law in the country, with most of its shares owned by people belonging to one family. It must be registered in the unified family business registry, which is established under the provisions of this law. Some of the prominent provisions of the decree-law are as follows:

The establishment of a unified register of family businesses under the supervision and follow-up of the Ministry of Economy.

The law applies to all family-owned companies that exist in the country, and the owners who own the majority of the shares in the family business. The law also applies to all commercial companies except for public and solidarity companies.

The law regulates the ownership of family businesses by defining their capital, how the partner disposes of his share, and the mechanism for waiving it, in addition to regulating the right of redemption and evaluation of shares and their categories, as well as the family company’s purchase of its shares.

Cancels the restriction on the maximum number of shareholders in the family company when it is in the form of a limited liability company.

Formation of a committee in each emirate called the ‘Family Business Dispute Resolution Committee’. This is due to the fact that disputes are one of the top reasons that lead to the termination of family businesses.

The law establishes a set of mechanisms for managing the family business, whether by the director or the board of directors.

The law clarifies that if any of the partners desires to dispose of his share in the family business, he must present it to the rest of the family partners.

The family business must distribute a part of its annual profits at the end of each fiscal year to its partners, according to the proportion of each partner’s share in the family business, unless the articles of incorporation stipulate otherwise.

Removes the ‘family business’ status of a company if people from outside the family own the majority of its shares and have the right to vote in accordance with the provisions of the law.

The law states that a family business does not cease to exist due to the death, interdiction, bankruptcy or insolvency of one of the partners.

The law grants the heir the right to remain in the family business as a partner as much as his inherited share or dispose of his share. Shares in the family business may not be assigned except in accordance with the conditions stipulated in the law.