Dubai Issues Family Ownership Law

On 13 August 2020, the Emirate of Dubai introduced a new law regulating Family Ownership (Law No (9) of 2020; the “Law”).

The Law’s aim is to establish a comprehensive legal framework to regulate family-owned property in the Emirate, maintain continuity over such property and facilitate the inter-generational transition. Property can consist of any movable or immovable property – shares in commercial companies and real estate in particular – with the notable exception of shares in public joint-stock companies.

The Law enables members of one family to enter into a legally binding contract (the “Family Property Contract”) providing for the collective ownership and administration of family-owned property for the benefit of family members party to the Family Property Contract, as well as their successors.

Family members have substantial flexibility to define the terms of their arrangement, to fit each family’s specific needs. Provisions relating to proportionate ownership with respect to rights to income and capital can be provided for; so are provisions relating to the administration and management of the family property.

Administration of the family property is the responsibility of one (or more) manager(s). The Family Property Contract sets out the terms of reference of its management, as well as provisions relating to oversight of the manager(s) by a board of directors, and his/her appointment and dismissal.

A key focus of the law are disposals of shares in the family property, be it a voluntary transfer, by way of inheritance or in case of bankruptcy. A right of first refusal is provided for Family members signatory to the agreement, thereby preventing dilutions.

Any disputes arising from a Family Property Contract shall be settled by a special judicial committee comprised of experts in legal, financial and family management matters, ensuring the confidentiality and privacy of any dispute. The notarisation of the Family Property Contract is a formal condition of its validity.

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