TRW & Co · Private wealth and family business
Family Business Law in the UAE: Governance and Succession
Family business law UAE families rely on is Federal Decree-Law No. 37 of 2022. A company majority-owned by one family can register as a family business and gain share classes, family-only transfer rules, buy-out tools, a family charter and a dedicated dispute committee. Combined with holding structures, it is the backbone of succession planning.
Key pointThe articles of association, not the family charter, are where control is won or lost: if share classes and transfer rules sit only in the charter, the articles prevail and the plan may not bind heirs.
At a glance
Optional registration
Companies majority-owned by one family may register in a unified family business register kept by the Ministry of Economy and Tourism with emirate authorities.
Share classes allowed
Class A shares carry profit and voting rights and Class B shares carry profit rights only, separating control from economic entitlement for heirs.
Family pre-emption
A family partner who wants to sell must offer shares to the other family partners first, and family ownership must remain in the majority.
Continuity on death
A partner's death does not end family business status unless the articles say otherwise; heirs may stay as partners or sell subject to pre-emption.
Specialised disputes
Disputes go to an emirate-level family business committee after any internal conciliation, unless the family chooses arbitration or the financial free zone courts.
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The core of family business law UAE founders need to know is Federal Decree-Law No. 37 of 2022 on Family Businesses. It lets a company that is majority-owned by one family register as a family business and, in return, use tools ordinary companies law does not offer: share classes with different rights, family-only transfer rules, buy-back and squeeze-out mechanisms, a family charter and a dedicated dispute committee. Registration is a choice, not an obligation.
This article explains what the 2022 law does, how it sits alongside the Commercial Companies Law, Dubai's family property law and the DIFC and ADGM foundation regimes, and how families use it with holding structures to plan succession. It is a practical companion to our practice page on family business governance in the UAE.
The short answer
- What it is. A federal regime for companies in which most shares are owned by members of a single family and which register in a unified family business register kept by the Ministry of Economy and Tourism, in coordination with the emirate authorities.
- Who can use it. Companies in the forms allowed by the Commercial Companies Law, including one-person companies, but not joint stock companies or partnership companies. Free zone companies can use it where it does not conflict with their free zone rules.
- What it offers. Different share classes, pre-emption in favour of family members, mechanisms to buy out minorities, a limited buy-back, continuity on a partner's death, governance bodies and a specialised dispute route.
- What it does not do. It does not replace succession law. Shares still pass to heirs on death, and it is lifetime arrangements and structures that shape who controls the business.
The legal framework
The 2022 Family Businesses Decree-Law
Federal Decree-Law No. 37 of 2022 Concerning Family Businesses was issued in October 2022 and took effect three months after publication, at the start of 2023. It defines a family business as a company most of whose shares are owned by members of one family and which is registered as such. "Family" covers relatives by descent and marriage, with the Cabinet able to define the concept further.
The Decree-Law applies alongside the Commercial Companies Law. Where it says nothing, the general companies rules apply; where it provides something specific, such as share classes or transfer restrictions, it takes priority for registered family businesses. Recent amendments to the companies law have also widened flexibility for ordinary companies; see our note on Commercial Companies Law amendments.
Dubai's family property law
Dubai has a separate regime for assets owned in common by family members. Dubai Law No. 9 of 2020 Regulating Family Property provides a framework for families who hold property jointly to agree how it is managed and to keep it together, and it has since been amended. It is relevant where the family's wealth sits in real estate held directly rather than through a company.
DIFC and ADGM structures
The DIFC and ADGM common-law centres offer foundations, trusts and holding companies that are widely used by UAE families to hold shares in operating businesses. A foundation's charter and by-laws can settle who controls the group after a founder's death without a probate process for the shares it holds. See DIFC foundations and ADGM foundations.
Key tools in the family business law UAE regime
| Mechanism | What the law allows | Why it matters |
|---|---|---|
| Share classes | Class A shares with profit and voting rights; Class B shares with profit rights only; further categories set in the articles | Separates economic entitlement from control, so non-active heirs share profits without diluting management |
| Family pre-emption | A partner selling must first offer shares to family partners; transfers to a spouse or first-degree relatives are excepted | Keeps ownership in the family and gives a structured exit route |
| Sale to outsiders | Requires approval from partners holding a large majority of capital, unless the articles set another threshold; family ownership must stay in the majority | Prevents a single branch from selling control outside the family |
| Squeeze-out rights | A partner with a very high majority can buy out minority holdings at an agreed or committee-set value | Allows consolidation where small holdings have fragmented across generations |
| Company buy-back | The company may buy back up to 30% of its shares in defined cases | Funds exits for a family member when no other partner buys |
| Family charter | Optional document on values, ownership, valuation, profit policy, employment of family members and disputes; can be deposited in the register | Records the family's agreement in a form the company's governance can rely on |
| Dispute committee | A specialised committee in each emirate decides disputes after any internal conciliation, with a right of appeal to court; arbitration or financial free zone courts can be chosen instead | Faster and more private than ordinary litigation |
Under family business law UAE rules, the articles of association prevail over the charter if the two conflict. That makes drafting the articles, not just the charter, the central task.
Should your company register?
Registration under the family business law UAE regime suits some groups far better than others. It tends to make sense where ownership is already spreading across a second or third generation, where some shareholders work in the business and others do not, or where the family wants a binding route to keep shares inside the family.
It is less compelling for a company owned by one founder with no near-term succession event, for a group whose operating companies are mainly joint stock companies, or where key assets sit in jurisdictions that will not recognise the arrangements. In those cases, a holding structure and a well-drafted shareholders' agreement may achieve most of the same aims.
Ask three questions before deciding:
- Control. Do you need voting and economic rights to diverge between branches or generations? If so, statutory share classes are a strong reason to register.
- Exit. Do you need a fair, predictable way for a family member to leave without selling to an outsider? The pre-emption, buy-back and valuation mechanisms help.
- Disputes. Would a private, specialised forum be better for your family than ordinary courts? The committee route, or a chosen arbitration, can be written in.
If the answer to at least two is yes, family business law UAE registration usually deserves serious consideration.
How to register and restructure: step by step
- Map the family and the assets. Identify the operating companies, real estate, investments and who currently owns what, including informal or nominee holdings that need to be regularised.
- Decide the holding structure. Choose whether the family business itself will be registered, whether a holding company sits above it, and whether a foundation or trust will hold the holding company. Our guide to setting up a holding company in the UAE covers the options.
- Agree governance principles. Before drafting, agree who may own shares, who may work in the business, how leaders are chosen, how profits are distributed and how disputes are resolved.
- Draft the articles and charter. Translate those principles into articles that use the Decree-Law's tools, and a charter that records the wider family arrangements.
- Apply to register. Register the company in the unified family business register through the Ministry and the relevant licensing authority, and deposit the charter if desired.
- Align personal planning. Update wills and succession documents so that shares pass in a way that is consistent with the structure. See our guide to wills and inheritance for expats for non-Emirati families.
- Review regularly. Revisit the charter, board composition and succession plan at set intervals and on major family events.
Succession under family business law UAE rules
Under the Decree-Law, the death, interdiction or insolvency of a partner does not end family business status unless the articles say otherwise. On a partner's death, the director supervises the transfer of the shares to the heirs in their legal shares and updates the articles. Heirs may remain partners or dispose of their inherited shares, subject to the family pre-emption rules.
The law also provides that transfers of shares or assets among family members during a partner's lifetime, by sale, gift or grant of usufruct, are not to be treated as breaching the personal status law. That is significant: it gives families legal room to arrange ownership while the founder is alive, rather than leaving it entirely to inheritance rules.
In practice, the cleanest succession plans combine three layers: a registered family business with well-drafted share classes; a holding entity, often a foundation, that holds control; and personal planning that is consistent with both. For Muslim families, the lifetime-transfer provision and the use of share classes help balance fixed inheritance shares with continuity of management.
Use share classes deliberately. Giving every heir voting shares fragments control within a generation. Many families reserve voting shares for a holding entity or for active family members, give profit-only shares to others, and set clear conversion conditions in the articles so the arrangement can evolve.
Family business law UAE structures compared
| Structure | Strengths | Limitations |
|---|---|---|
| Registered family business (onshore LLC) | Share classes, family pre-emption, dispute committee, continuity on death | Shares still pass through succession; requires majority family ownership |
| Holding company above operating companies | Single point of control; easier transfers and financing | Holding company shares still need succession planning |
| DIFC or ADGM foundation holding the group | Continuity without probate for held assets; charter and by-laws set control | Set-up and running costs; requires active governance |
| Shareholders' agreement only | Flexible and private | Contractual only; harder to enforce against heirs who are not party to it |
The structures are not mutually exclusive. A common pattern is a foundation that owns a holding company, which in turn owns registered family businesses. Our guide to shareholders agreements in the UAE explains how contractual arrangements fit alongside.
An illustrative scenario
Illustrative only; the parties are generic. A founder owns a trading and real estate group through three onshore LLCs. Two of his four children work in the business; two live abroad. Shares have been held informally, with some in a cousin's name.
The family first regularises the nominee holdings. It then establishes a holding company and a foundation in a financial free zone, with the foundation holding the voting shares in the holding company. The operating companies are registered as family businesses. Active children hold Class A shares through the structure; the two children abroad receive Class B shares with full profit rights. A family charter sets eligibility to work in the business, a dividend policy and a conciliation step before any dispute goes to the committee.
When the founder later steps back, management passes under the charter and the foundation's by-laws, not through an inheritance case. The children abroad remain economically equal but do not need to be involved in day-to-day decisions.
Risks and common mistakes
Writing a charter without changing the articles
A family charter is valuable, but the Decree-Law provides that the articles of association prevail where the two conflict. If share classes, transfer restrictions and appointment rights are only in the charter, they may not bind the company or the heirs. Put the enforceable rules in the articles.
Leaving nominee and informal holdings in place
Shares held in a relative’s or employee’s name are a common source of disputes after a founder’s death. Regularise them before restructuring, with proper documentation of the beneficial owner. Beneficial ownership registers also make accuracy a compliance issue.
Treating registration as the plan
Registering as a family business unlocks tools; it does not decide who leads the business, how the next generation is prepared or how wealth is shared. Families that skip those conversations often find the structure fails at the first succession.
Leaving valuation to chance
Most family exits and buy-outs turn on price. The Decree-Law lets the articles or charter set a valuation mechanism, and otherwise the committee or an expert may fix value. Agree the method in advance: who values, on what basis, how often, and whether minority or marketability discounts apply. A clear formula prevents the most bitter disputes.
Ignoring dispute design
The Decree-Law offers a conciliation step, a specialised committee, arbitration and the financial free zone courts. Choose deliberately and write it into the articles and charter. Where disputes do arise, early advice helps; see shareholder and co-founder disputes in the UAE.
Cross-border families
Many UAE family groups have members, assets or companies in Saudi Arabia, India, Bangladesh, the UK or Singapore. Foreign holdings will follow local company and succession law, and family members resident abroad may face tax on distributions or on transfers of shares. Structures that work well under family business law UAE rules can create unexpected consequences elsewhere, so plan with advisers in each relevant country. Where the family is setting up a dedicated office to manage wealth, see our guide to setting up a family office in the UAE.
What to do next
- Map family members, entities and assets, including informal holdings.
- Decide whether to register as a family business and which entities to register.
- Choose a holding structure and whether a foundation or trust should sit at the top.
- Agree governance principles, then draft articles and a charter that reflect them.
- Align wills and personal planning with the corporate structure.
- Set a review cycle and a dispute route before you need one.
TRW & Co advises families and founders on family business law UAE structuring, charters, share classes, holding structures and succession, coordinating with tax advisers and with our offices abroad. Where disputes require representation before the onshore courts or the DIFC and ADGM Courts, we work alongside locally licensed advocates and registered practitioners. To discuss your family's position, contact our Dubai team or email info@trw.co. Registration services are listed on the Ministry of Economy and Tourism website.
Frequently asked questions
01Is registration as a family business mandatory in the UAE?
No. The Family Businesses Decree-Law applies to companies that register as family businesses. Registration is a choice for companies whose shares are majority-owned by one family. Families that do not register can still use shareholders' agreements and holding structures, but they cannot rely on the specific tools the Decree-Law provides, such as statutory share classes and the dispute committee.
02Which companies can register as a family business?
Companies in the forms allowed by the Commercial Companies Law, including limited liability companies and one-person companies, can register if a majority of their shares are owned by members of one family. Joint stock companies and partnership companies are excluded. Free zone companies may use the regime to the extent it does not conflict with their free zone legislation.
03What is a family charter and is it binding?
A family charter is an optional document recording the family's values, ownership rules, valuation and profit policies, employment of family members and dispute procedures. It can be deposited in the family business register. However, if it conflicts with the articles of association, the articles prevail, so binding rules on shares and control should also be written into the articles.
04Can a family business stop heirs from selling shares to outsiders?
Largely, yes. A partner wishing to sell must first offer shares to family partners, and a sale to a non-family third party requires approval from partners holding a large majority of capital unless the articles set another threshold. The remaining partners and then the company have rights to buy shares acquired by an outsider, and family ownership must remain in the majority.
05How are family business disputes resolved?
If the articles or charter create a conciliation board, disputes go there first. If there is none, or conciliation fails within the set period, disputes go to a specialised family business committee in the relevant emirate, whose decisions can be appealed to the competent court. Families can instead agree on arbitration or the courts of the financial free zones.
06Does the family business law override inheritance rules?
No. Shares still pass to heirs under the applicable succession law on death. However, the Decree-Law confirms that lifetime transfers of shares or assets among family members, by sale, gift or usufruct, are not treated as breaching the personal status law. That gives families room to plan succession during the founder's lifetime.
Sources and official materials
- Federal Decree-Law No. 37 of 2022 Concerning Family Businesses — The federal family business statute
- Dubai Law No. 9 of 2020 Regulating Family Property — Dubai regime for property owned in common by family members
- Ministry of Economy and Tourism — Family business register and company services
- Dubai International Financial Centre — DIFC foundations, trusts and holding structures
- Abu Dhabi Global Market — ADGM foundations and family structures
General information only, current as at 27 October 2026. It is not legal advice and does not create a lawyer–client relationship. UAE law differs between the onshore jurisdiction, the DIFC, ADGM and the free zones, and changes frequently; check current official sources and take advice on the facts of your matter.
