As the chairman of the Tsangs Group, a Hong Kong-based family office, I am energised by the news of the new Dubai family office regulations. The recent Dubai International Financial Centre (DIFC) Family Arrangements Regulations and the UAE New Federal Law on Family Businesses will significantly impact the collaboration between Hong Kong and the United Arab Emirates.
The DIFC Family Arrangements Regulations now allow family offices in the United Arab Emirates (UAE) to operate without registering with the Dubai Financial Services Authority as a ‘designated non-financial business or profession’. This means that family offices will no longer be required to disclose the name of the common ancestor, source of wealth and amount of equity. This change will help facilitate the operations of family offices in the UAE, allowing them to focus on their core business activities.
The UAE New Federal Law on Family Businesses is another significant development set to change the landscape of family owned businesses in the UAE. The law establishes a comprehensive legal framework for family offices and is particularly important given the critical role family owned businesses play in the UAE’s economy. According to the Ministry of Economy, up to 90% of private companies in the UAE are family owned businesses that contribute approximately 70% of the country’s GDP. Therefore, the new law indicates that the UAE government recognises the importance of family owned businesses to economic growth and development.
The new law also seeks to prevent the selling of shares or dividends of family owned businesses to people or companies outside the family, requiring prior approval from family partners before a shareholder sells an equity stake to a non-family member.
Additionally, the formation of a committee in each emirate called the Family Business Dispute Resolution Committee aims to provide a mechanism for the resolution of family business disputes. This is particularly significant as disputes have been one of the leading causes of the termination of family businesses.
UAE support for family owned business welcomed
The continuous support from the UAE government for family owned businesses is also evident in the recently launched Thabat Venture Builder programme. The initiative aims to double family owned businesses’ contribution to the country’s gross domestic product to $320bn (Dh1.18trn) by 2032 by preparing them for the future economy. The programme will support companies through a five-month programme where they will look at how ideas can be transformed into viable business projects by adopting emerging technology. The initiative will also help family businesses enter sectors outside their traditional fields and encourage them to embrace advanced knowledge-driven industries such as AI, biotechnology, agricultural technology, space sciences and renewable energy.
As a family office based in Hong Kong, we see immense potential in the opportunities presented by the new regulations in the UAE. The UAE is already a hub for international business, and with the implementation of these new regulations it is poised to become a leading destination for family offices. The regulations will provide a stable and supportive environment for family offices, allowing them to operate with greater ease and efficiency. We believe that the regulations will lead to increased collaboration between Hong Kong and the UAE, providing opportunities for both regions to grow and prosper.
In conclusion, the new Dubai family office regulations are a significant development that will benefit family owned businesses and family offices. The regulations provide a clear legal framework and a supportive environment for family offices in the UAE. We at Tsangs Group are optimistic about the opportunities these regulations will bring to the UAE and the broader region, and we look forward to furthering our plans in the UAE in the future.