He Ministry of Economy launched a unified registry for family businesses, highlighting four new cabinet resolutions that will improve the governance of family businesses and support the competitiveness of the legislation governing the sector in the country. The initiative also aims to ensure the sustainability and leadership of family businesses in line with a clear vision to solidify the UAE’s position as a leading destination for local, regional and global family businesses.
Abdullah bin Touq Al Marri, Minister of Economy, He highlighted the prominent role of family businesses in promoting the growth and sustainability of economies around the world. According to estimates, family businesses represent 70 percent of private sector companies globally, 60 percent of the total workforce and 70 percent of global GDP. In the United Arab Emirates, the sector contributes 40 percent of the national GDP, representing 90 percent of the total number of private companies in the country. This underlines its importance and key role in supporting the achievement of the national target of doubling the country’s GDP to AED 3 trillion by the next decade, in line with the ‘We the United Arab Emirates 2031′ vision.
Bin Touq saying,
“Thanks to the wise vision of the UAE leadership, a solid foundation has been laid to ensure the sustainability of family businesses and the growth of their businesses for decades to come. The development of the family business sector in the UAE is carrying out in accordance with international best practices in this regard, through the enactment of various laws, proactive policies, initiatives and pioneering programs, in particular the “Thabat” program, designed to ensure the sustainable growth of family businesses in the global markets. country through successive generations and encourage allowing them to expand into new economic sectors taking advantage of all the opportunities and possibilities that the program offers.
“UAE family businesses are one of the main drivers promoting the growth and sustainability of the national economy, thereby supporting the country’s transition towards an innovative and knowledge-based future economy. The launch of the unified registry for the sector It is an important step forward in strengthening its governance and regulating registration procedures. This is necessary to build an integrated work system for family businesses in the UAE, in addition to the advanced legislation and technological infrastructure of which currently benefit. The introduction of the Family Charter is also key to the success and continuity of future generations of family businesses, as it defines ownership rules, objectives and family values, including quota evaluation and profit distribution mechanisms. “
Abdullah Ahmed Al Saleh, Undersecretary of the Ministry of Economy, saying,
“The United Arab Emirates continues to develop sustainable economic policies for the development of the family business sector given its importance as a key driver of national economic growth, while strengthening its competitiveness at regional and global levels. We focus on two main pillars for development of an integrated economic ecosystem of family businesses in the country: the first is the legislative aspect and the development of robust legislation for family businesses through the enactment of proactive laws and leadership policies at the regional and global level. The Decree -Federal Law No. 37 of 2022 on Family Businesses is an example, which established a roadmap for the governance of family businesses and the regulation of their ownership and operations in the country.”
“The second area of focus is the launch of various policies, initiatives and programs to facilitate the expansion of family businesses. ‘Thabat’, the first program of its kind in the Middle East, was launched to bring about qualitative change in the sector of the country’s family businesses and encourage them to pivot towards new economic sectors.
“In recent days we have witnessed the largest gathering of first-generation family businesses under the umbrella of the program, which aims to transform 200 family projects into fast-growing new companies by 2030.”
Al Saleh aggregate,
“As part of the UAE’s continued efforts to improve the governance of the family business sector and elevate it to new, more competitive and diverse levels, today we launch the unified registry for family businesses. This registry serves as a comprehensive and unified database that contains all information related to family businesses in the country, under the supervision of the Ministry of Economy.”
The Undersecretary explained that the implementation of the registry is part of Cabinet Resolution No. 109 of 2023 on the registration of family businesses. It includes the registration of family businesses, the issuance and revocation of their leadership certificates, and ongoing updates on the status of family businesses. This resolution specifies a set of controls and requirements related to the registration of the family business in the registry. For example, a family business should be one of the types of businesses that are not exempt from the scope of the Family Business Law Decree, and the majority of its shares must be owned by people belonging to a single family. The partners who own the majority of the shares in the family business decide to register it.
How to register a family business in the unified registry
The process of registering a family business in the unified registry consists of five steps, namely:
- The majority shareholders of the family business request its registration in the official register through the competent authority of each emirate.
- The competent authority of the emirate, which also covers the free zones, verifies that the family business complies with all specified standards and requirements.
- The corresponding authority is responsible for connecting and sharing the aforementioned data with the family business, and any changes or updates made to them are communicated to the Ministry of Economy.
- The Single Registration Department of the Ministry, once the required data and documents have been received, is responsible for managing the registration of the family business and issuing a certificate thereof.
- If there is no digital connection for data exchange between the Ministry and the relevant authority, the data must be shared using any other method coordinated between the two parties within three working days.
Procedure Requirements for the Deregistration of a Family Business
The resolution also stipulates the procedures and conditions for removing a family business that requests it from the Single Registry. Partners who own at least three-quarters of the capital of the family business can request the Ministry of Economy or the competent authority to deregister the company. Upon receiving the request, the competent authority shares it with the Ministry of Economy. Subsequently, the Ministry cancels the registration certificate of the family business and informs the competent authority of the cancellation.
According to the decision of the Council of Ministers, there are two cases that require the deregistration of a family business: either at the request of an interested party or by decision of the competent authority. This may happen due to a drop in family members’ share ownership to a point below the majority or percentage specified in the family business founding agreement, or if the family business is discovered to have misreported or inaccurate documents that could lead to your deregistration as a family business. Interested parties have the right to oppose the deregistration by submitting a claim to the Ministry within 15 business days.
Besides, Al Saleh highlighted three new resolutions issued by the Ministry of Economy support the creation of a sustainable environment that ensures the growth and global leadership of family businesses. These include Cabinet Decision no. 106 of 2023 on the registration of the family letter, which requires online registration of the letter on the Ministry’s website. The statute establishes specific rules on ownership, objectives, family values, as well as mechanisms for evaluating shares and dividend methods.
Al Saleh He explained that Cabinet Decision No. 107 of 2021 regarding the purchase of shares by family businesses complies with the provisions of article No. 11 of the Family Businessesw, as it stipulates a set of mechanisms to implement the purchasing process, as follows:
- The general assembly of the family business has approved the purchase process and has authorized the board of directors or the manager of the family business, if applicable, to proceed with the purchase request.
- Then, the family business requests the competent authority to approve the purchase, committing the company to comply with the obligations established by the authority. Additionally, you must obtain consent from the relevant government bodies if the company’s activities are under their jurisdiction, along with any other documents requested by the authority.
- The family business requesting the purchase undertakes to execute the purchase process within the period established by the competent authority when approving the purchase request.
- Subsequently, the corresponding authority will make its decision to approve or reject the application within 15 business days following the date of the application, provided that all the required data and documents are met.
Cabinet Decision No. 108 of 2023 on Conditions and Terms Related to Multiple Categories of Shares of Family Businesses establishes controls for the issuance of multiple categories of shares by the family business, including the articles of association or the articles of association. the family. company, depending on the circumstances, specifying the rights and privileges assigned to each category of shares, and that the shares must be of one category if all the rights and privileges assigned to them are equal.
According to this resolution, the family business has the right to modify or revoke categories of shares or their associated rights. You can also establish rules and conditions for making such changes in the articles of incorporation or bylaws, as necessary. Additionally, the resolution specifies that if the rules and conditions for modifying or revoking categories of shares or their associated rights are not defined in the founding contract or the bylaws, a resolution to make changes must be approved by a 75 percent majority. or more of the votes of the members with the right to vote, as established in the founding contract or in the statutes.
Al Saleh He confirmed that these new resolutions will offer greater flexibility and facilitation for the operations of family businesses in the UAE, supporting the expansion of their operations in various sectors. National efforts will continue to improve the attractiveness of the UAE for family businesses, aligning them with the objectives of the next fifty years.
News source: Emirates News Agency