The Federal Decree Law No. 37 of 2022 is a landmark piece of legislation forming part of the comprehensive Thabat (keep up) programme, a partnership between Dubai Chambers and the Ministry of Economy. Thabat reflects the commitment of both parties to support the growth of family businesses and prepare them for the opportunities and challenges triggered by the digital economy, the rapid adoption of disruptive technologies while offering opportunity for diversification of their investment portfolios and acceleration of the digital transformation required to ensure competitiveness and business continuity.
This initiative sets an ambitious target for family-owned businesses in Dubai, aiming to transform them into major companies by 2030, with a projected market value exceeding Dh150 billion and annual revenues surpassing Dh18 billion. Central to this law is the commitment to the continuity of family businesses, providing them with robust legislative support and a regulatory framework designed to facilitate the seamless transfer of businesses from one generation to the next.
“Dubai is keen to ensure we have the right climate that helps family businesses grow and flourish generation after generation, contributing to the Dubai Economic Agenda D33’s objective of making Dubai one of the world’s top urban economies as well as the fastest-growing and most attractive business hub.” Sheikh Mohammed bin Rashid Al Maktoum.
In line with this objective, Dubai has taken a monumental step towards safeguarding the economic contributions of family businesses with the establishment of a dedicated ‘Committee for Dispute Settlement of Family Businesses and Ownership’ operating under Dubai Centre for Family Businesses (DCFB), a center launched by Dubai Chambers in May 2023.
This initiative aligns with the emirate’s strategic aim to bolster the legal framework in which family businesses operate, focusing on justice, rule of law, a comprehensive legal framework to support family business and ownership sustainability in Dubai, ensuring their continuity and contributing to the region’s economic and social stability.
- The Committee for Dispute Settlement of Family Businesses and Ownership is composed of Judges and Financial Experts who bring specialized judicial expertise to the mitigate disputes. Their mission is to ensure the fair and expedient resolution of disputes, all the while protecting the ongoing operations, financial health, and reputations of the family businesses involved.
- With authority outlined in the Resolution, the committee is empowered to take necessary actions to safeguard the sustainability and reputation of family businesses during dispute resolutions. An appeal judge, or one of higher rank, will chair the committee, ensuring that the governance structure remains robust and just.
- The committee’s purview extends to disputes stemming from family ownership contracts and partnerships, emphasizing the resolution of conflicts that have the potential for amicable settlement, initially referring such matters to the Family Members Council.
- Decisions made by the Committee can be appealed to the competent court, as stipulated by Federal Decree-Law No. 42 of 2022.
- In addition to managing disputes, the Committee must submit regular reports to the Ministry of Economy, ensuring that its operations are subject to periodic review and align with the national economic goals.
For family businesses, this new regulatory mechanism offers a significant advantage. It assures them that their disputes can be managed and resolved within a framework that prioritizes their longevity and prosperity. This is especially crucial given the pivotal role such businesses play in the UAE’s economy, where they constitute up to 90% of private companies, employ over 70% of the sector’s workforce, and contribute roughly 40% to the Emirates’ GDP.
The introduction of this committee is an important development for family businesses operating in Dubai. It not only fortifies the legal framework in which these enterprises thrive, but also emphasizes the UAE’s dedication to nurturing family businesses across generations.
For detailed insight into how the Federal Decree Law No. 37 of 2022 and the newly formed committee can aid in the stewardship and longevity of family businesses, entities are encouraged to seek expertise from our legal professionals.
Should you have any questions or may need a legal opinion or advice, please feel free to reach out to our Managing Partner, Mr. Ashraf El Motei, at [email protected].
