The UAE Family Companies Law: Strategic Opportunities — and Hidden Traps — for Business Owners

The UAE Family Companies Law (Federal Decree-Law No. 37 of 2022) was enacted to address a core vulnerability in the region’s economy: the long-term sustainability of family-owned businesses across generations.

While often treated as a simple registration regime, the law is neither symbolic nor automatic in its effects. It is a governance and ownership overlay that delivers value only where its mechanisms are deliberately designed and implemented.

What the Law Does — and Does Not Do

The Family Companies Law does not create a new corporate form and does not displace the UAE Commercial Companies Law, except where it expressly provides otherwise (Article 26). It introduces no special tax treatment and does not override regulatory or licensing requirements.

Its stated purpose is governance-driven: facilitating continuity, succession, and dispute management for family-owned businesses (Article 2). Registration alone achieves none of these outcomes.

Key Strategic Opportunities

Family Charter Recognition
Families may adopt a Family Charter regulating ownership principles, dividends, education, valuation, and dispute handling (Article 6). However, the memorandum and articles prevail in case of conflict (Article 6(3)), making alignment essential.

Advanced Ownership Structuring
The law allows multiple share classes with differentiated voting and economic rights (Article 12), enabling separation of control from economics and reducing succession-driven paralysis.

Statutory Exit and Buy-Back Tools
The law expressly permits company buy-backs (up to 30%) and introduces mandatory purchase rights at 90% and 95% ownership thresholds (Articles 9 and 11). These tools are powerful, but only if valuation and funding are addressed upfront.

Common Hidden Traps

Registration Without Substance
Registration in the family companies register (Article 4) has limited effect unless constitutional documents and governance frameworks are updated accordingly.

Over-Engineered Consent Rights
Excessive vetoes and supermajority thresholds often freeze decision-making and push disputes into the statutory dispute framework (Article 19).

Succession Built on Assumed Harmony
The law facilitates inter vivos succession planning (Article 24), but does not resolve divergence among heirs. Equal ownership rarely equates to equal involvement or alignment.

Ignoring the Dispute Architecture
Absent agreement otherwise, disputes fall within the jurisdiction of the Family Companies Disputes Committee, which has wide interim powers to preserve business continuity (Articles 19 and 20). This should be a conscious design choice, not an afterthought.

Federal Decree-Law No. 37 of 2022 offers family businesses a robust statutory framework for governance, succession, and continuity. But it is not self-executing.

Used thoughtfully, it can preserve value across generations. Used superficially, it risks entrenching ambiguity and accelerating conflict. The law amplifies intent — it does not replace it.

For further information, please contact:

Ahmed Hadeed
a.hadeed@hadeedpartners.ae

This article is current as of 10 February 2026 and is intended for general information purposes only. It does not constitute legal advice. For specific guidance on your transaction, please contact our team.

© Hadeed & Partners 2026