What new UAE company laws mean for family businesses: Could they ease inheritance disputes?

Dubai: The UAE’s latest overhaul of its Commercial Companies Law could quietly reshape the future of family-owned businesses across the country, offering new legal tools to manage inheritance, succession and control at a time when many firms are undergoing generational transitions.

While much of the attention has focused on startups, foreign investors and free zone reforms, legal experts say some of the most meaningful impact of the changes will be felt by family businesses – particularly when founders pass away, and ownership is transferred to the next generation.

Guided by the country’s long-term vision, the amendments aim to create “a flexible and open investment climate for companies of all sizes and legal forms,” according to Minister of Economy and Tourism Abdulla bin Touq Al Marri.

“This enhances the contribution of the private sector to economic diversification, business sustainability and GDP growth,” he said.

One of the most significant changes is the new framework governing the disposal of shares belonging to deceased partners or shareholders. The law now gives priority rights to existing partners, shareholders or the company itself to purchase those shares at an agreed value.

This is designed to prevent ownership from becoming fragmented or passing to unintended parties, a common trigger for disputes in family-run firms.

“These amendments will represent a qualitative leap in corporate governance and business regulation in the UAE,” bin Touq said. “They create new attraction factors for local and foreign companies and investments in line with global best practices.”

Family businesses often struggle when ownership is divided among multiple heirs, some active in the business and others not. The new law allows multiple classes of shares in limited liability companies, giving families more flexibility to separate control from financial interest.

This makes it easier to reward active family members with decision-making authority while still protecting the economic rights of others, reducing the risk of internal paralysis.

The formal recognition of drag-along and tag-along rights also helps manage situations where some family members want to sell and others do not. These provisions make it easier to proceed with sales, buyouts or strategic partnerships without long-running disputes.

The aim, officials say, is to support smoother ownership transfers and encourage mergers and acquisitions.

The law now allows companies to change their legal form without being treated as a new entity. For family firms, this means they can restructure, professionalise or prepare for future listings without losing their commercial history or contracts.

“We anticipate an increase in company registrations and licences in UAE markets by 10–15 per cent in the first year of implementation,” bin Touq said, highlighting the expected impact of the reforms.

Many of the UAE’s family businesses were founded decades ago and are now entering second- and third-generation ownership. As companies grow larger and more complex, the risks associated with poorly managed succession increase.

By strengthening rules on ownership transfer, control and restructuring, the new law aims to protect business continuity at a critical moment for thousands of family firms.

As bin Touq put it, the goal is to build legislation that “meets the aspirations of the business community, our key partner in sustainable development over the next 50 years.”