Finance World Magazine| Edition: February 2024

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UAE Reforms source: freepik.com The ministry’s unified registry aligns with Cabinet Resolution No. 109 for family business registration. UAE’s Unified Registry Reforms: Strengthening Family Business Governance The evolving policies and frameworks showcase a commitment to fostering an environment for longterm success among family businesses in the UAE. The United Arab Emirates (UAE) has embarked on a transformative journey to fortify the governance and sustainability of family businesses, signalling a pivotal shift in its economic landscape. With the Ministry of Economy unveiling a unified registry and enacting four resolutions, the UAE is redefining the framework for family enterprises. These reforms, aimed at bolstering governance and competitiveness, underscore the nation’s commitment to fostering an environment where local, regional, and global family companies thrive. The article explores the registration, deregistration, and governance procedures of family businesses in the UAE, as stipulated by the new unified registry law, emphasising transparency and compliance within this regulatory framework. 14 www.thefinanceworld.com February 2024
The cornerstone of this transformation lies in recognising the pivotal role of family businesses in shaping economies worldwide. H.E. Abdulla bin Touq Al Marri, Minister of Economy, emphasised their significance, highlighting their substantial contribution to the global private sector, workforce, and GDP. In the UAE, where these businesses constitute a significant portion of the national GDP and private companies, their role is paramount in realising the country’s ambitious economic goals outlined in the ‘We the UAE 2031’ vision. Central to these reforms is the introduction of the Family Business Law Decree and the subsequent establishment of a unified registry. This registry serves as a comprehensive database, streamlining the registration process for family companies. It mandates specific criteria for registration, ensuring that only eligible family businesses become part of this centralised system. This process, spanning five distinct steps, ensures transparency and compliance while facilitating smoother operations for family enterprises. Firstly, the majority shareholders of the family-owned enterprise initiate the registration by applying through the relevant authority in each emirate. This authority, encompassing free zones as well, meticulously verifies the family company’s compliance with all specified regulations and prerequisites. Following this, the authority manages the data and ensures seamless communication between the family-owned company and relevant parties, with any updates promptly shared with the Ministry of Economy. Subsequently, the Department of the Unified Registry at the Ministry takes charge, overseeing the registration process upon receiving the necessary documentation and data, ultimately issuing the certification for the family company. In cases where digital connectivity is absent between the Ministry and the relevant authority, alternate coordinated methods are utilised to share the data within three working days to ensure a streamlined registration process. Moreover, the establishment of deregistration procedures is crucial to uphold the credibility and accuracy of the unified registry for family businesses in the UAE. These procedures are designed within a robust framework that ensures stringent checks and balances. They serve as safeguards against any inaccuracies or deviations from the specified ownership structures outlined during the registration process. By delineating a clear process for deregistration, the framework empowers authorities to thoroughly review and assess the reasons behind a family business’s potential removal from the registry. This could occur if there are substantial deviations from the initially provided information regarding ownership, which might compromise the integrity of the registry. Additionally, these measures help prevent any unauthorised or misleading information from being associated with registered family businesses, thereby maintaining the trustworthiness and reliability of the information stored within the unified registry. The credibility of the registered family businesses is thereby reinforced, ensuring that the registry remains a comprehensive and accurate database of eligible family enterprises within the UAE. The integration of the Family Charter into the unified registry stands as a testament to the commitment to sustainability and succession planning within family enterprises. This charter sets out ownership rules, values, and mechanisms, crucial for the continuity and long-term viability of these businesses across generations. Facilitating share purchase mechanisms and outlining guidelines for issuing multiple share classes further enhances the adaptability and growth prospects of family businesses. These resolutions provide a structured approach, allowing for strategic decision-making and flexibility in adapting to evolving market demands. H.E. Al Saleh detailed Cabinet Decision No. 107 of 2021, aligning with Article No. 11 of the Family Businesses Law, outlining a structured procedure for family companies to purchase their shares. This mechanism mandates several key steps: the initial approval from the family company’s general assembly, empowering the board of directors or the company manager to proceed with the purchase. Subsequently, the family company seeks approval from the relevant authority, committing to adhere to specified obligations and obtaining the necessary consent from government bodies if applicable. The commitment includes executing the purchase process within a stipulated time frame set by the competent authority. The final decision on the approval or rejection of the purchase request is made by the relevant authority within 15 business days, contingent upon the submission of all required data and documents. Cabinet Decision No. 108 of 2023 introduces stringent controls governing the issuance of multiple share categories within family companies, emphasising the importance of clarity in the allocation of rights and privileges for each category. These controls, delineated within the company’s articles of association or bylaws, ensure that shares of the same category possess equal rights and privileges. Moreover, the resolution grants the family company the authority to modify or revoke share categories or associated rights, allowing for the establishment of specific rules within the founding contract or bylaws to facilitate such changes when necessary. Notably, if procedures for altering or revoking share categories aren’t defined, a 75% or more majority vote from partners with voting rights, as specified in the founding contract or bylaws, is mandated to authorise such modifications. H.E. Al Saleh emphasised that these resolutions mark a significant milestone, providing increased flexibility for the operations of family businesses across diverse sectors within the UAE. These measures are aligned with the nation’s ongoing efforts to enhance its appeal for family businesses, supporting their expansion and fostering an environment conducive to their sustained growth. These initiatives are in line with the country’s long-term objectives, ensuring a thriving ecosystem for family enterprises over the coming decades. These reforms underscore the UAE’s commitment to nurturing an ecosystem where family businesses thrive, contributing significantly to the nation’s economic landscape. By aligning legislative advancements with visionary programs, the UAE stands poised to elevate its position as a global destination for family companies. The unveiling of these resolutions marks a pivotal moment in the UAE’s economic narrative. As the country looks towards the next fifty years, these reforms pave the way for sustained growth, innovation, and global leadership within the realm of family enterprises. February 2024 www.thefinanceworld.com 15
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Finance World Magazine| Edition: February 2024

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