The new family business law, which will come into force in January 2023, was introduced by the UAE government to enhance and raise the family business environment in the country to globally competitive levels
The new federal law regulating family businesses in the country will attract more family companies and businesses to the UAE and will boast the economy, a top government official has said.
The new family business law, which will come into force in January 2023, was introduced by the UAE government to enhance and raise the family business environment in the country to globally competitive levels.
During a media briefing in Abu Dhabi on Monday to introduce the Federal Decree Law No. 37 of 2022 on family businesses, Abdullah bin Ahmed Al Saleh, Undersecretary of the Ministry of Economy, said the family business sector is a major economic growth driver in most countries and they play a fundamental role in establishing new businesses, attracting investments and creating job opportunities in various sectors.
He noted that the new law is part of government efforts set to enhance the family business sector’s role as a major contributor to national economic growth and a key partner in the UAE’s sustainable development over the next 50 years.
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 who decide to register it in the unified register as a family company in accordance with the provisions of the law. The law also applies to all commercial companies except for public and solidarity companies.
The law 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.
“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’ programme,” said Al Saleh.
“These are 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 Thabat programme’s ambitious objectives include turning 200 family-owned businesses into major companies by 2030, with a market value of over Dh150 billion and annual revenues exceeding Dh18 billion.
With regard to the importance of the economic role of family businesses, Al Saleh pointed out that they account for 70 per cent of the private sector companies globally, 60 per cent of the global workforce, and 70 per cent of the global GDP. In the UAE, 90 per cent 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 $100 billion, and 50 per cent of the owners of these companies include five shareholders or less,” he said.
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.
The official explained that the issuance of the law is a proactive and distinguished step for the UAE at both regional and global levels as it is a pioneering and distinguished legislation in the field.
There exists no other legislation regulating the operations of family businesses such as the UAE’s and this is set to consolidate the country’s position as a foremost and preferred destination for family business investments and projects, regionally and globally.
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.