Unified registry aims to double sector’s contribution to the nation’s GDP
The UAE, the second-largest hub in the Middle East for family-run businesses after Saudi Arabia, has launched a unified registry for family firms as part of a series of measures aimed at doubling this key sector’s contribution to the nation’s gross domestic product to $320 billion by 2032.
The registry will serve as a comprehensive and unified database containing all information related to family companies in the country, the Ministry of Economy said in a statement. The registry is part of efforts to enhance the governance of these businesses and streamline their operations.
Family businesses currently account for nearly 90 per cent of the UAE’s private sector firms, and contribute 40 per cent of the national economy.
Abdulla bin Touq Al Marri, UAE Minister of Economy, said the introduction of the Family Charter is key to the success and continuity of future generations of family companies as it defines the rules of family ownership, goals and values, including mechanisms for assessing quotas and distribution of profits.
The minister said the registry would bolster family businesses’ sustainability and leadership and solidify the UAE’s position as a leading destination for local, regional and global family companies.
“The launch of the unified registry for the sector is an important step forward in strengthening its governance and regulating their registration procedures. This is necessary to build an integrated work system for family enterprises in the UAE in addition to the advanced legislation and technology infrastructure they currently benefit from,” Al Marri said.
Around 25 per cent of the Gulf region’s most successful family businesses are based in the UAE and 92 per cent of them are diversified conglomerates.
The UAE has been taking several steps to support family-owned businesses, including approving a law that allows family businesses to be listed on the country’s financial markets.
In January 2022, the government issued a new family business ownership governance law to facilitate the transition to successive generations. The law prevents selling shares or dividends of family-owned businesses to people or companies outside the family, and requires prior approval from family partners before a shareholder sells an equity stake to a non-family member.
In September 2022, the UAE launched a programme that aims to double family-owned businesses’ contribution to the nation’s gross domestic product to $320 billion by 2032, and help them become more innovative and adopt new technologies: Thabat Venture Builder. This is the first such initiative in the region, and will guide companies through a five-month programme to help them transform ideas into viable projects.
The programme aims to transform 200 family business projects into major companies by 2030 with a market value exceeding Dh150 billion and annual revenue of Dh18 billion.
In line with the national programme, Dubai Chambers set up a dedicated centre in 2023 to help family businesses navigate challenges including succession planning and achieving sustainable growth.
The ministry has outlined various steps for registering a family business in the unified registry. First, the majority shareholders of the family-owned company must apply for registration in the official registry through the relevant authority in each emirate.
Second, the relevant authority in the emirate, which also covers free zones, will verify that the family company meets all the specific regulations and requirements. The third step is that the relevant authority, which is in charge of connecting and sharing the mentioned data with the family-owned company, should communicate changes or updates made to it to the Ministry of Economy.
The Department of the Unified Registry at the Ministry, after receiving the required data and documents, is responsible for managing the registration of the family company, and a certificate is issued. If there is no digital connection for data sharing between the Ministry and the relevant authority, the data must be shared using any other coordinated method between the two parties within three working days.
Summary of Article by: Zawya / Issac John, Khaleej Times
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