Dubai enacts family joint ownership law

The Regulating Family Ownership Law No.9 of 2020 (the Law), issued on 13 August, enables family members to customise the terms of a family property contract as they deem appropriate for their own benefit. All types of property other than publicly quoted shares can be included in the agreement.

The contract must be notarised and can be tailored with specific proportionate ownership provisions in relation to rights to income and capital. The idea is to enable even the most complicated of family business structures to be managed via a combination of key family members and professional appointees.

Such a contract must also set out arrangements for the administration and management of the assets, which will be the responsibility of one or more managers. It will state the terms relating to the manager's oversight by a board of directors, and their appointment and dismissal.

The Law provides for acquisition of interests in the underlying family property via the transfer of an individual family member's interests in the family property contract. This can be the transfer to successors via inheritance, or through specific provisions dealing with bankruptcy and disposal to third parties.

A special judicial committee of legal, financial and family management experts is to be convened to deal with disputes arising from a family property contract, in order to protect the family's confidentiality and privacy. The Law specifies that contracts should be interpreted 'to ensure the continuity, development and smooth transition of family property from one generation to another'.

A key aspect of the Law's success will be the approach of the Emirate government entities in their implementation of necessary measures to give it effect, including the preparation of appropriate corporate and real estate records, said Richard Catling, Partner, and Nawal Abdel Hadi, Senior Associate, in the corporate commercial team at law firm Al Tamimi. 'We wait to see how governmental bodies will implement this Law in practice in light of current policies and regulations in place.'

The Law is valid from the date of being gazetted, and repeals any previous legislation that contradicts its provisions.

Sources

• Al Tamimi & Co