Abu Dhabi’s Ruler has approved a new family business ownership governance law.
It is aimed at strengthening the sector’s contribution to the economy and facilitating the transition to successive generations.
It also aims to improve the legislation in this area by adopting a more flexible and sustainable economic model, in line with best governance practices internationally.
In addition, it aims to boost family businesses’ contribution to the diversification and growth of the economy.
It will empower owners of family business to prevent the selling of shares or dividends to individuals or companies outside the family and to get approval from the family partners first 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 avoid expropriation.
The current law does not apply to family-owned businesses where non-family members own more than 40% of shares.
The new law are applied to family-owned businesses on an opt-in basis for owners or co-founders by submitting a request to the Economic Development Department.
The Department will issue the Implementing and administrative regulations to the new law from March 2022.
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