Setting Up a Family Business in the UAE
Introduction
Family-owned businesses form a crucial segment of the UAE’s business landscape. They play a pivotal role in driving the development and growth of both the UAE and the broader GCC economy. Recently, the Ministry of Economy launched a unified registry for family businesses along with four new cabinet resolutions to improve governance and legislative competitiveness. This initiative ensures the sustainability and leadership of family businesses, positioning the UAE as a top destination for family enterprises globally.
What is a Family Business?
A family business involves two or more family members actively participating, with the majority of ownership or control residing within the family. Essentially, a family office is a private entity that manages the wealth, investments, and legal affairs of a high-net-worth family, overseeing multiple family businesses. It also provides support functions like accounting and payroll, ensuring successful wealth growth and transfer across generations.
Importance of Family Businesses in Free Zones
The UAE has established legal and regulatory frameworks for setting up family offices, with specific regulations in ADGM, DIFC, DWT, and DMCC free zones. Each free zone has its definitions for family members, minimum paid-up capital requirements, and compliance and reporting standards. Notably, all these free zones do not tax personal income or capital gains of family offices. They allow family offices to offer asset and wealth management, day-to-day accounting, legal affairs management, and administrative services to family-owned businesses under their umbrella.
Setting Up a Family Office in the DIFC
For nearly 20 years, the Dubai International Financial Centre (DIFC) has offered a supportive and dynamic environment for global and regional family-owned businesses, ultra-high-net-worth individuals, and private wealth. Recently, the DIFC announced the enactment of the New DIFC Family Arrangements Regulations, providing guidelines for family businesses controlled by families holding assets and operating in or from the DIFC. The new regime allows families to manage their businesses and preserve wealth through succession and legacy planning within DIFC, setting a standard for good conduct enforceable across the UAE and beyond.
Setting Up a Family Office in the ADGM
Abu Dhabi Global Market (ADGM) offers a unique, stable platform for family wealth management, providing a flexible suite of products and solutions. It hosts numerous advisors skilled in utilizing ADGM’s offerings to effectively manage and preserve family wealth. ADGM’s diverse structures and solutions optimize family wealth planning and organize family businesses, whether assets and subsidiaries are in ADGM, the UAE, or overseas. ADGM Holding Companies and Special Purpose Vehicles effectively structure family interests, ensuring asset protection and tax efficiency.
Why Should You Start a Family Business?
Family businesses in Dubai play a vital role in safeguarding and mounting the wealth of affluent families. The UAE Federal Decree Law No.37 of 2022 aims to:
- Create a comprehensive legal framework for ownership and governance of family businesses in the UAE, enabling generational transfers.
- Support the continuity of family businesses and strengthen their role in the private sector.
- Provide mechanisms for resolving family disputes.
- Boost the contribution of family businesses to the UAE’s economy and competitiveness.
Benefits of Starting a Family Business in the UAE
- Favorable tax environment
- Strategic location and global connectivity
- Clear and transparent regulations
- Sophisticated financial ecosystem
- Gateway to emerging markets
- Advancement in innovation and technologies
- Strong legal system
- Access to global investment opportunities
How to Register a Family Business?
- Apply for registration in the relevant authority’s official registry.
- Verify all specific regulations and requirements with the authority.
- The relevant authority shares data with the family-owned company and communicates any updates to the Ministry of Economy.
- The Department of the Unified Registry manages family company registrations and issues certificates upon receiving the required documents.
Why Choose ECAG Incorp?
Operating in the UAE for over 18 years, ECAG Incorp provides ongoing support to obtain business licenses in Dubai and other Emirates, including family business licenses. The UAE offers an ideal environment for affluent families to manage and protect generational wealth. Our specialists will help you pave the way with guidance on business structure, target market, and legal services.
Starting a family business in the UAE offers numerous advantages, from a favorable tax environment to strategic global connectivity. With clear regulations and a strong legal system, the UAE stands out as a premier destination for family-owned enterprises. ECAG Incorp is here to assist you every step of the way.