A Snapshot View of the New Family Property Law27-09-2020
Dubai Law 9 of 2020 Regulating Family Property in the Emirate of Dubai (the “Law”) provides an extremely useful and practical solution to the problems faced by family-owned businesses.
Many families and high net worth individuals often own a variety of assets such as real property, companies, trademarks, shares, bank accounts both in the UAE and abroad. This Law helps to administer the vast and varied assets for such families.
For example, there may be many buildings with innumerable rent contracts for each flat; and several companies that have been established at different times for different purposes; properties owned overseas; etc. Very often such assets are in the name of the head of the family who depends upon different managers and there may be no unified approach to managing and growing the business. There is also uncertainty on succession which reflects as uncertainty in the business. The Law encompasses all these areas.
Family is defined as the “Spouse and blood relatives or in-laws up to the fourth degree” and “Family Property” is defined as real and personal property, copyrights and neighboring rights, the industrial property of patents, industrial drawings and designs, trademarks, and any other rights that may be the subject of the Family Property Contract.
The Law applies at the option of family members defined as “Partners” to the Family Contract who have joint property. The Family may make a notarized Family Property Contract, which specifies the share of each Partner. The term of the contract may not be longer than 15 years, renewable for similar terms by unanimous consent. The Family Property Regulated by a Family Contract may establish a board of the Partners and the Partners holding at least two-thirds of the Family Property may by resolution appoint one or more managers. The Family Contract may lay down procedures and rules for the management of the Family Property in accordance with the wishes of the Partners and Law. Since the Partners or heirs are part of the Family Property Contract, succession is also clear.
While such family-owned businesses were previously considered setting up foundations and similar structures, the Family Law now addresses and streamlines ownership, management, and succession issues related to family-owned property. Any disputes arising out of such Family Property Contracts will be addressed by the Judicial Committee established by HH the Ruler of Dubai to settle such disputes.