The UAE, over the past decades, has extended immense support towards global technology and financial firms.
What is often not as highlighted is that the government provides significant help to family-run businesses as well.
The latest addition on that front was a new ownership governance law to facilitate a smooth transition for companies between generations by UAE President and Abi Dhabi ruler Sheikh Khalifa bin Zayed Al Nahyan.
New law specifications
The new law significantly improves the legislative ecosystem of family-owned businesses by pursuing a sustainable economic model.
With this injunction, family businesses will have the right to refuse to sell their ownership stakes to non-family members, and their growth will be supported.
Owners will also need prior approval from their relatives before they sell their equity stake.
To avoid expropriation, owners of family enterprises can issue family-owned shares with weighted voting rights and prevent the pledging of family-owned firms as encumbered assets.
Corporate tax in the UAE is expected to be among the most competitive in the world, thanks to the 9-percent introductory tax rate and the nil rate for taxable profits up to AED375,000 (around $102,100).
Personal income that does not come from a licensed or permitted business or commercial activity in the United Arab Emirates will not be subject to corporate tax.
Benefits
Due to the impact of family businesses on the GCC economies, Jimmy Haoula, a Partner at BSA Ahmad Bin Hezeem & Associates LLC, told TRENDS in an interview that the new business ownership governance law has helped such businesses sustain their operations, growth, and wealth throughout, and for the future generations.
In the past, it was always troubling when a pioneering family member passed away: The people after him might not have the same aspirations, experience, or planning.
As a result, many businesses were diminished throughout time.
The new law will help family businesses sustain their presence and grow even further with future generations, in Haoula’s opinion.
Impact of family businesses
A slight peek into the UAE’s history reveals that family-owned businesses started almost everything from scratch 50 years ago, from buildings to industrial sectors, along with the government’s ownership.
These businesses also helped shape the country’s economy, Haoula said.
He considers it extremely important to sustain family businesses as a recognition for their efforts historically, and for the advantages they could bring to the future of the UAE.
UAE vs other GCC countries
UAE-based family-run businesses’ performance appears to outshine international and regional companies except for conglomerates like Amazon and Google.
And the new legislation is only in line with the government’s intention to make the UAE a better economy, Dubai a safer city, and for everybody to come.
Haoula explained, “The new legislation makes everybody [feel] welcomed, and that for sure will make it a very approachable place for employment and investments.”