Family Business Law in the UAE: Ownership, Governance, and Business Continuity

06 July 2026

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Family Business Law in the UAE: Ownership, Governance, and Business Continuity

Family Business Law in the UAE: Ownership, Governance, and Business Continuity

The UAE's Family Companies Law (Federal Decree-Law No. 37 of 2022) regulates the ownership and governance of companies whose majority shares are held by members of a single family, and establishes the legal framework that ensures these companies' continuity and smooth transfer across generations. This guide covers the law's scope of application, ownership and share regulation, the family governance charter, and the mechanisms for business continuity and dispute resolution.

What Is a Family Company and What Is the Law's Scope?

The law defines a family company as any company established under the Commercial Companies Law whose majority shares or stakes are held by persons belonging to a single family. The law applies to any family company existing at the time it takes effect, or established afterwards, whenever the owners holding a majority of shares decide to register it in the unified register as a family company. Public joint-stock companies and general partnership companies are excluded from the law's scope, while all other forms provided for under the Commercial Companies Law, including single-owner companies, are covered.

Objectives of the Family Companies Law

The legislator set four main objectives for this law: establishing a comprehensive and facilitative legal framework for regulating the ownership and governance of family companies and easing their transfer between generations; supporting the continuity of these companies and enhancing the private sector's role in economic growth; providing suitable mechanisms for resolving disputes related to them; and strengthening their contribution to the state's economy and competitiveness. These objectives align with the fact that family companies represent a large share of total private companies operating in the real estate, retail, tourism, industrial, and logistics sectors.

The Unified Register of Family Companies

The law established the Unified Register of Family Companies under the supervision of the Ministry of Economy, aiming to organise these companies' operations and enable them to benefit from all the advantages and flexibilities provided for under the law. Registration in this register is conditional on the company fulfilling all the requirements and provisions set out in it, and this registration is the first step toward benefiting from the legal protections specific to family companies.

Regulating Ownership and Shares in a Family Company

The law regulates aspects of family company ownership in detail, starting with determining the share capital and how a partner may dispose of their share, through the mechanism for transferring shares, to regulating the redemption right and the valuation and classification of shares, and the company's ability to buy back its own shares. A family company's share capital consists of equal or unequal shares, as agreed in advance in the memorandum of association, and shares may not be transferred except in accordance with the conditions and provisions set out in the law.

The law grants every partner in a family company a right of pre-emption to purchase other partners' shares in the event of a partner's bankruptcy, preserving the family character of the company and preventing undesired outside parties from entering its ownership structure.

The Family Charter and Company Governance

The law defines the family charter as the written document that regulates the governance of family matters relating to the family company and the relationship between the family and the company. This charter represents the core governance tool that sets clear rules for decision-making within the family and its reflection on the company's management, reducing the likelihood of disputes between generations or different branches of the family.

Profit Distribution Among Partners

The law requires a family company to distribute part of its annual profits to its partners at the end of each financial year, each according to their share percentage, unless the memorandum of association provides otherwise. This requirement balances partners' right to a financial return with the company's need to retain part of its profits for reinvestment and growth.

Business Continuity and Ownership Transfer Between Generations

Among the most notable matters addressed by the law is the continuity of the family company following the death of a partner: the heir is granted the right to remain in the company as a partner to the extent of the share they inherited, or to dispose of that share in accordance with the law's provisions. This right prevents the company from breaking apart or halting its operations due to changes in ownership across generations, and provides a clear legal path for the transfer of both management and ownership together without disrupting the company's stability.

Dubai's Local Framework: Law No. 9 of 2020 on Family Ownership

Alongside the federal law, the Emirate of Dubai issued Law No. 9 of 2020 on Regulating Family Ownership in the Emirate of Dubai (amended by Law No. 21 of 2024), a broader local framework covering family ownership in general — whether shares in commercial or civil companies, sole-establishment assets, or any other movable or immovable property — not just companies.

Family ownership under this law is managed through a family ownership contract notarised before a notary public in Dubai, valid only if its parties are family members, share a single business or common interest, each partner's share is clearly determined, and the contract does not contravene public order. Dubai has also established the Centre for Family Businesses (under Decree No. 45 of 2022) to support these entities, in addition to the Family Companies and Family Ownership Dispute Resolution Committee in Dubai (under Resolution No. 14 of 2023), a local committee independent from the federal committee, competent to hear disputes over family ownership contracts concluded in the emirate.

Resolving Family Company Disputes

The law provides for establishing a Family Companies Dispute Resolution Committee under Article 20, to serve as the competent body for hearing disputes arising between partners or between the family and the company, offering a faster and more private route than traditional court litigation, one that takes into account the sensitive nature of family relationships tied to company ownership.

Bankruptcy and Insolvency in a Family Company

In the event of a partner's bankruptcy or insolvency, the procedures set out in the applicable bankruptcy or insolvency law are followed, and the trustee appointed by the court under such legislation handles matters related to the insolvent partner's share, while taking into account the other partners' right of pre-emption to purchase that share in order to preserve the company's family character.

Important reminder: Benefiting from the Family Companies Law is conditional on the company actually being registered in the unified register with the Ministry of Economy — the law's provisions do not apply automatically to any unregistered family company.

Practical Tips for Family Business Owners

Start by drafting a clear family charter before any dispute arises — having pre-agreed governance rules provides an objective reference point when family members' views differ.

Consult a lawyer specialised in family companies law before drafting the memorandum of association, to ensure it complies with the law's provisions and sets out clear mechanisms for share transfer and inheritance among heirs.

Legal References

Federal Decree-Law No. 37 of 2022 on Family Companies, and the Commercial Companies Law (Federal Decree-Law No. 32 of 2021); at the Emirate of Dubai level: Law No. 9 of 2020 on Regulating Family Ownership in the Emirate of Dubai, as amended by Law No. 21 of 2024, in addition to other relevant local legislation issued in certain emirates regulating family ownership.

Frequently Asked Questions About the Family Companies Law

Q What is the definition of a family company under the law?

It is any company established under the Commercial Companies Law whose majority shares or stakes are held by persons belonging to a single family, and which is registered in the Unified Register of Family Companies.

Q Is registration in the unified register mandatory?

Registration takes place by decision of the owners holding a majority of shares, and it is the essential condition for benefiting from the advantages and special provisions the law offers to family companies.

Q What happens to a deceased partner's share?

The heir has the right to remain in the company as a partner to the extent of the share they inherited, or to dispose of that share in accordance with the conditions and provisions set out in the law.

Q Which companies are excluded from this law?

Public joint-stock companies and general partnership companies are excluded from the law's scope, while all other forms provided for under the Commercial Companies Law are covered.

Q What is the difference between the federal law and Dubai's Law No. 9 of 2020?

Federal Law No. 37/2022 specifically regulates the ownership and governance of family companies, while Dubai's Law No. 9/2020 is broader in scope and covers any shared family ownership — whether company shares, real estate, or other movable property — through a different legal instrument: the family ownership contract.

Q How are disputes between family company partners resolved?

The Family Companies Dispute Resolution Committee established under the federal law hears such disputes at the federal level, while the Family Companies and Family Ownership Dispute Resolution Committee in Dubai hears disputes over family ownership contracts concluded under Dubai's Law No. 9/2020.

Legal Disclaimer

This content is for general legal awareness purposes only and does not substitute specialised legal advice tailored to the circumstances of each case. We recommend consulting a qualified lawyer before taking any legal action, as the specifics of each company affect how the law applies and the resulting outcome. In the event of any discrepancy between this English content and the original Arabic version, the Arabic version shall prevail. For further information or to obtain a consultation, please contact AWADH ALMHEIRI LAW FIRM AND LEGAL CONSULTATIONS.

AWADH ALMHEIRI LAW FIRM AND LEGAL CONSULTATIONS in Dubai provides specialised legal advice on drafting family company memoranda of association, family governance charters, and represents partners in ownership and generational transfer disputes.

Our family companies services also extend across the rest of the UAE, providing consultation and legal representation to family business owners in Abu Dhabi, Sharjah, Ajman, Umm Al Quwain, Ras Al Khaimah, and Fujairah, in line with the local regulations applicable in each emirate.