To strengthen the economy and to facilitate the transition to the next generations, the Ruler of Abu Dhabi, President His Highness Sheikh Khalifa bin Zayed Al Nahyan has issued a new family business ownership governance law. According to a statement published by the emirate’s government media office, the main aim of the move is to boost family businesses’ contribution to the growth of the economy.
The new law prevents prohibit the sale of shares or dividends to individuals or companies outside the family and it empowers it on the owners of the family business. As per the law, it is required to have prior approval from family partners before a shareholder sells their respective equity stake to a non-family member.
With the new law, Owners of family businesses can issue family-owned shares with weighted voting rights and prevent family-owned businesses from mortgaging heavy assets and can avoid encroached property, and also to avoid extortion. However, the law does not apply to family-owned businesses in which non-family members hold more than 40 percent of the shares.
Emirate’s government media office on Twitter noted “In his capacity as Ruler of Abu Dhabi, Khalifa bin Zayed has issued a law regulating family business owners to further enhance the sector’s contribution to the local economy and ensure a smooth transition to successive generations.”