UAE FAMILY OFFICES

How and where to structure Single and Multi Family Office in Dubai?

The new UAE Family Business Law provides great opportunities to transfer family business structures to the UAE with full legislative protection and right for repatriation of capital in the future. How to chose the best jurisdiction for your Family Office?

What is a family office?

A Family Office is a private wealth management organization that provides comprehensive financial and investment services to high-net-worth families. These offices typically offer services such as investment management, estate planning, tax planning, philanthropic giving, and other customized financial solutions. Family offices are typically established by wealthy families to manage their assets and investments, and to provide ongoing financial advice and support to family members across generations. In the UAE, family offices have become increasingly popular as more families seek to preserve and grow their wealth in a rapidly changing economic environment.

UAE ''Thabat'' Initiative

Thabat (from Arabic ' Family') is an initiative launched by the United Arab Emirates government to support the growth and development of family-owned businesses in the country. The program aims to provide a range of services and resources to help these businesses thrive, including access to funding, mentorship programs, training and development opportunities, and networking events. Thabat also provides guidance on succession planning and helps families navigate the challenges of passing their businesses on to the next generation.

The goal of Thabat is to create a strong and sustainable ecosystem for family-owned businesses in the UAE, which play a vital role in the country's economy.

UAE Legislation Changes to Family Office Regulation


UAE Family Business Law, also known as UAE Decree-Law No. 37 of 2022, is a legislation that aims to regulate family-owned businesses in the UAE. The law provides a legal framework for the governance, management, and ownership of these businesses, including rules on succession planning, dispute resolution, and transparency. It also requires family businesses to establish a family council and a family charter to ensure effective communication and decision-making among family members. The law aims to promote the sustainability and growth of family businesses in the UAE by providing a stable and supportive environment for their operation.

The new federal decree applies to all family businesses where the majority owner of the capital agrees to register the business on the Unified Register of Family Businesses established pursuant to this decree. A family company can take the form of any company recognized under federal law on commercial companies (except public limited companies and partnerships) or under the laws in force in a free trade zone. A majority of the shares in a family business must also be owned by people belonging to the same family.

Federal law introduces new and innovative concepts that can be used by UAE family businesses. Interestingly, the legislation provides provisions on a number of matters not covered by the Commercial Companies Act that enable family businesses, such as permitting stock classes in which owners enjoy various rights and allowing up to 30% of the shares in a family business to be repurchased to facilitate family retirement. In addition, legislation provides for forced exit mechanisms that prohibit existing shareholders from selling their shares to individuals or companies outside their family. In addition, the legislation eliminates restrictions on the number of shareholders a family company can hold.

The decree also allows families to regulate their affairs and close family constitutions to ensure governance of the family and the family business. We offer family-run flexibility, allowing families to make their own arrangements. In particular, families may establish various governing bodies such as family councils, family councils, family offices, and other committees.

Legislation also allows families to choose an appropriate dispute resolution mechanism. For example, families may choose to have their disputes resolved by appeal to the courts of the Financial Free Zone, arbitration, or through a special committee in each emirate established by this legislation. Family businesses that are regulated under legislation may also benefit from incentives and concessions granted at the Cabinet's discretion. The exact nature and nature of these incentives are not currently stipulated in legislation.

Finally, the decree covers important aspects of any succession planning and points out that the regulation of family business under this decree and the laws enforced in free zones do not violate the Personal Status Act.

Why is the UAE a Right Jurisdiction For Family Office?

The United Arab Emirates has been successfully chosen as one of the investment destinations for family offices and family businesses as a business location. A comprehensive investment-friendly strategy opens the door for international family businesses and high net worth (high net worth) investors to relocate, build and plan family wealth custody structures.

Family businesses are the engine of the economy and his 90% of private companies are owned by family entrepreneurs and businesses. The UAE aims to increase the contribution of family businesses to AED 1.17 trillion by 2032 by providing best opportunities to reinvest family capital to tech companies.

Single Family Offices (SFO) in Dubai

Dubai has always been an excellent jurisdiction for entrepreneurs and multinationals. However, recent developments in family office legislation have firmly established the jurisdiction of single family offices in the UAE.

A single family office may be incorporated as a Free Zone Company (FZE or FZCO), a private offshore corporation that manages the investments and assets of a single multigenerational family. SFO companies offer a wide range of services including financial planning, real estate planning and tax preparation, investment management, accounting and payroll, legal management, financial management and family reconciliation. These services are tailored to your family's needs and preferences and are designed to help you meet your long-term financial goals. Unlike multi-family offices, which provide asset management services to multiple clients, single family offices specialize only in managing family assets and investments.

In addition to the classical forms of family office structures, there are also structures for investment and capital management purposes in which third parties are allowed to enter. Such structures are implemented through the creation of so-called holding companies, special purpose vehicles, as well as companies with separate cells for assets - analogous to American and offshore SPC, series LLC (segregated portfolio companies).
A segregated portfolio company (SPC) is a type of company structure that allows for the creation of separate portfolios or compartments within a single legal entity.
Each portfolio is treated as a separate entity with its own assets and liabilities, and is insulated from the risks and liabilities associated with the other portfolios. This allows investors to invest in a specific portfolio without being exposed to the risks associated with the other portfolios. SPCs are commonly used in investment funds, insurance companies, and other financial institutions.


Dubai International Financial Centre (DIFC)

Dubai International Financial Centre (DIFC) is a free economic zone that has existed since 2004 and is the first zone to introduce structures for family offices in accordance with the UAE Federal Law No. 37 of 2022 "On Family Business".
Requirements:
  • minimum authorized capital of $50,000 or the availability of liquid assets in the amount of $ 10 million.
Advantages and Features:
  • The structure should belong to an individual family member(s).
  • No personal income tax or capital gains tax.
  • Persons who are not family members are allowed to be members of the management Board. 100% foreign ownership and 0% income tax are allowed.
  • No restrictions on the repatriation of capital.
  • Inheritance mechanism for non-Muslims.

Dubai Multi-Commodities Centre (DMCC)

Dubai Multi-Commodities Centre (DMCC) is one of the fastest growing free economic zones offering an SFO license.
Requirements:
  • minimum authorized capital of AED 50,000, mandatory availability of liquid assets in the amount of $ 1 million,
  • proof of involvement in the family for shareholders,
  • business plan.
Advantages and features:
  • The structure should belong to family members, including family relatives who are direct relatives of the parent (spouse). One of the family members must act as a founder, a member of the board of directors.
  • Persons who are not close relatives may
  • No personal income tax or capital gains tax.
  • 100% foreign ownership and 0% income tax are allowed.
  • Inheritance mechanism for non-Muslims.

Dubai World Trade Centre (DWTC) - provides a regulated ecosystem for family offices, providing a secure business environment with internationally recognized legislative policies.

Ras Al Khaimah International Corporate Centre (RAK ICC) provides opportunities for wealthy families to create their own holding companies and offshore structures.
Advantages and features:
  • DWTC SFO can be created in the form of FZE (Free Zone Establishment), FZE (Free Zone Company) with a minimum authorized capital of AED 500,000 ($136,000)
  • RAK ICC makes it possible to create a structure without minimum requirements for the authorized capital. There are no requirements for participation of only close relatives.
  • No personal income tax or capital gains tax.
  • 100% foreign ownership and 0% income tax are allowed.
How can we help?
Our professional legal and tax team advises free zones and local companies in the Middle East and North Africa (MENA) region. If you require any further information, please contact us and ask for advise.