Law No. (9) of 2020
Regulating
Family Property in the Emirate of Dubai[1]
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We, Mohammed bin Rashid Al Maktoum, Ruler of Dubai,
After perusal
of:
Federal Law No. (5) of 1985 Issuing the
Civil Code of the United Arab Emirates and its amendments;
Federal Law No. (10) of 1992 Issuing the
Law of Evidence Governing Civil and Commercial Transactions and its amendments;
Federal Law No. (11) of 1992 Issuing the
Civil Procedure Code, its Regulatory Bylaw, and their amendments;
Federal Law No. (37) of 1992 Concerning
Trademarks and its amendments;
Federal Law No. (18) of 1993 Concerning Commercial Transactions;
Federal Law No. (7) of 2002 Concerning
Copyright and Related Rights and its amendments;
Federal Law No. (17) of 2002 Concerning
Regulation and Protection of Industrial Property Rights of Patents, Drawings,
and Industrial Designs and its amendments;
Federal Law No. (28) of 2005 Concerning
Family Affairs and its amendments;
Federal Law No. (2) of 2015 Concerning
Commercial Companies and its amendments;
Federal Law by Decree No. (9) of 2016
Concerning Bankruptcy and its amendments;
Law No. (7) of 2006 Concerning Real
Property Registration in the Emirate of Dubai and its amendments;
Law No. (4) of 2013 Concerning Notaries
Public in the Emirate of Dubai; and
Law No. (13) of 2016 Concerning the
Judicial Authorities in the Emirate of Dubai,
Do hereby
issue this Law.
This Law will be cited as "Law No.
(9) of 2020 Regulating Family Property in the Emirate of Dubai".
The following words and expressions,
wherever mentioned in this Law, will have the meaning indicated opposite each
of them unless the context implies otherwise:
|
Emirate: |
The Emirate of Dubai. |
|
Ruler: |
His Highness the Ruler of Dubai. |
|
Family: |
The spouse, and the
blood
relatives and in-laws up to the fourth degree. |
|
Family Property: |
The movable and immovable property;
Copyright and Related Rights; Industrial Property Rights of Patents,
Drawings, and Industrial Designs; trademarks; and other rights subject
of a Family
Property Contract. |
|
Family Property Contract: |
An agreement concluded by Family
members who are engaged together in business, or have common interests, to regulate
Family Property that is co-owned by them in undivided shares and determine the
method of management of such property. |
|
Partner: |
A party to a Family Property Contract
or an Heir who expresses, whether in person or through his legal
representative, his intention to be a party to the Family Property Contract. |
|
Heir: |
A legitimate successor of the estate of
a Partner. |
|
Manager: |
A natural or legal person who is
appointed by the Partners to manage the Family Property. |
|
Tribunal: |
A special tribunal formed by the Ruler
to settle any disputes arising from Family Property Contracts. |
This Law aims to:
1.
develop a comprehensive and clear legal framework to regulate
Family Property in the Emirate and facilitate its transfer to successive
generations;
2.
preserve Family Property and enhance its contribution to economic
and social development in the Emirate;
3.
maintain social cohesion and avoid anything that may
cause disputes amongst Family members;
4.
establish strong and lasting partnerships amongst Family members to
compete in all economic activities, and encourage them to serve the community
especially in the fields of education, health, and culture; and
5.
meet development and growth needs by developing the capabilities of
successive generations of young leaders to manage Family Property, and enabling
them to benefit from the past experience of fathers and forefathers.
The provisions of this
Law will apply subject to the will of Family members who
jointly hold
the ownership of property,
whether this ownership has existed by the effective date of this Law or is established thereafter. The subject
of this ownership may be:
1.
shares and stocks in commercial and civil companies and assets of
sole proprietorships, excluding shares and stocks in public joint stock
companies; or
2.
any other movable or immovable property.
Family Property will be created and
regulated pursuant to the Family Property Contracts governed
by the provisions of this Law, and subject to the
conditions agreed upon by the Partners.
To be valid, a Family Property Contract
must meet the following requirements:
1.
All parties to the contract must be members of a single Family.
2.
All parties to the contract must be engaged together in business or have a common interest.
3.
The share of each Partner must be determined in the Family Property
Contract.
4.
The parties to the Family Property Contract must own, or have the right to
dispose of, the property subject of the contract.
5.
The Family Property Contract must be attested by a Notary Public in
accordance with the rules and procedures stipulated in the above-mentioned Law
No. (4) of 2013.
6.
The Family Property Contract must not conflict with public order.
A Family Property
Contract that meets the requirements stipulated in Article (6) of this Law will
have the same evidential value of the official documents attested by Notaries Public,
as against other Partners, their universal or particular successors, and third
parties.
a.
The term of a Family Property Contract will be determined by
agreement of the Partners, but may not exceed fifteen (15) years. The contract
may be renewed unanimously by the Partners for the term they agree upon,
provided that this term does not exceed fifteen (15) years.
b.
Where the Partners fail to agree on the term of a Family Property
Contract, any Partner may request the Tribunal's permission to exclude his share from the
Family Property after the lapse of six (6) months from the date on which he notifies
this intention in writing to the other Partners.
a.
A Family Property Contract will be valid and will have its legal
effect as of the date determined by the Partners. The Partners may agree that the contract commencement
be conditional upon the death of any Partner specified therein.
b.
As to whether the Family Property Contract would
be enforceable and binding
upon an Heir, he may opt for any of the following:
1.
to continue as a Partner
in the Family
Property Contract in proportion to the share of the
Family Property bequeathed to him; or
2.
to dispose of the share of the
Family Property bequeathed to him, subject to his compliance with the
provisions of Article (13) of this Law with respect to offering his
share to other Partners.
A Family Property Contract may
be amended with the agreement of a
number of Partners who own at least seventy-five percent (75%) of the Family
Property, unless the contract provides for a higher percentage.
a.
A Family Property Contract must determine the share of each Partner
in the Family Property.
b.
Where any dispute arises amongst Partners concerning their
shares in the Family Property, these shares will be determined
based on each Partner’s legal share in the estate where their
joint ownership of the Family Property
is due to the death of their legator, or based on the valuation of the contribution of each Partner where
their joint ownership of the Family Property is not due to
inheritance, such as in the case of providing financial or in-kind contributions.
c.
Where any assets of the Family Property are comprised of
shares or stocks in companies, the entering by a Partner into the Family
Property Contract will be deemed acceptance on his part of the articles
of association of these companies.
a.
Where a Partner dies, each of his Heirs who
wish to continue as parties to the Family Property Contract will own the share bequeathed to him
by that Partner in the Family Property.
By accepting the ownership of that share, the Heir agrees to enter
into the Family
Property Contract.
b.
The relevant general rules stipulated in the legislation in force
will apply to any matter related to the share of a Partner in the
Family Property in case that Partner goes missing, lacks
capacity, is placed under interdiction, or is prevented by any reason or
circumstances from the quiet enjoyment of his share.
a.
Subject to the provisions of paragraph (b) of Article (8) of this
Law, no Partner may request the subdivision of the Family Property while the Family Property
Contract is still valid.
b.
Where a Partner or an Heir wishes to dispose of his share in the
Family Property, he must offer this share for sale to other Partners, in proportion to their
respective shares in the Family Property. However,
where the Partner or Heir wishes to dispose of his share through
assignment to his spouse, to any of his first degree relatives, or to a
specific Partner, he will not be required to offer the share for sale to
other Partners, unless the Family Property Contract provides otherwise.
c.
No Partner or Heir may dispose of his share to other than Partners
or grant a third party a real right in that share without first
obtaining the approval of a number of Partners who own at least fifty-one
percent (51%) of the Family Property.
d.
Where no Partner expresses his wish to acquire the ownership
of the share of
the Partner or Heir wishing to dispose of his share in the Family Property
pursuant to the provisions of paragraph (b) of this Article, or where the
Partners object to the disposition of that share to a third party in accordance
with paragraph (c) of this Article, the Tribunal may grant
permission to that Partner or Heir
to dispose of his share to third parties if it finds that such disposition is reasonably justified,
provided that the disposition does not affect the integrity of the Family
Property.
e.
In all events, the disposition of the share of any Partner or Heir in
Family Property must be in accordance with the legislation in force in
the Emirate.
a.
Where a third party acquires the ownership
of the share of
a Partner or an Heir for any reason other than those stated in Article (13) of
this Law, all or any of the other Partners may, within sixty (60) days from the
date on which they become aware of this acquisition, request to acquire
the ownership of that share at the price agreed upon with that third party or at the price determined by the
Tribunal where no agreement is reached.
b.
Where no Partner requests, within the period specified in paragraph (a)
of this Article, to acquire the ownership of the Partner's or Heir's share devolved to
the third party, that party will be
accepted as a Partner only with the approval of a number of Partners who own at least fifty-one percent
(51%) of the Family Property, unless the Family Property Contract provides
for a different percentage. Where this approval is not granted, the Tribunal
will issue a decision for compensating the third party for the share; or demarcating
the share and excluding it from the Family Property, in which case the third party will be enabled to take
possession of the same in accordance with the legislation in force in
the Emirate.
a.
Without prejudice to any legislation in force, where a Partner
declares his bankruptcy or insolvency, the other Partners may, in proportion to
their respective shares in the Family Property, acquire the ownership of the Partner's
share to be included in the bankruptcy or insolvency estate at the
price to be agreed
upon with the bankruptcy or insolvency trustee or to be determined by the
Tribunal in the absence of such an agreement.
b.
Where no Partner requests to acquire the ownership of the Partner's
share included in the bankruptcy or insolvency estate as stated in paragraph (a) of this
Article, the Tribunal will issue a decision for
compensating the Partner for the share; or demarcating the share and excluding
it from the
Family Property, in which case the bankruptcy or insolvency trustee will be enabled to take
possession of the same in accordance with the legislation in force in
the Emirate..
a. The
Family
Property governed by a Family Property Contract will be managed by a Manager
who is appointed pursuant to a resolution of a number of Partners who own at
least two-thirds (2/3) of the Family Property. The Manager may be one or more
persons from amongst the Partners or third parties, but their number
must always be odd. A Manager may also be a legal person.
b. The
management of Family Property will be governed by this Law and the
rules and procedures stipulated in the Family Property Contract.
c. Partners may not
interfere with the management of the Family Property or any of
its assets, except as
stipulated in the Family Property Contract.
d. A Family Property
Contract may stipulate that a board of directors be formed to supervise the
management of
the Family Property and the work of the Manager. Members of the board of
directors will be nominated in the Family Property Contract,
failing which the contract must determine the entity authorised to nominate these
members. The
Family Property Contract may also stipulate the rules, regulations, and
conditions that govern the formation, powers, term of membership, remuneration and removal of the members, and affiliated committees
of the board of directors. The Family Property Contract may also determine the subjective and
objective criteria of membership and any other matters related to
the governance of
the board of directors.
e. The
appointment of the Manager or members of the board of directors will not be
affected by the death, bankruptcy, insolvency, missing status, or lack
of capacity of one or more of the Partners. The
management of the Family Property will remain unaffected until a new Manager
is appointed or the board of directors is reconstituted in accordance with the
procedures stipulated in the Family Property Contract.
f. Partners who are not
appointed as Managers will have the right to be acquainted
with the Family Property
affairs. They may also form a council of Partners and establish its functions; membership requirements; and organisational,
administrative, and financial structures, as well as any other provisions that aim
to promote
positive and constructive communication amongst Partners,
to enhance their communication with the Manager, and
to regulate any other matters related to the governance of that council of Partners.
g. A Family Property
Contract may determine the minimum academic qualifications, experience,
behavioural traits, and other criteria that must be met by Partners and members
of their Families to work at the companies and establishments that form part of
the Family Property. The satisfaction of these criteria must be reviewed by a
committee constituted pursuant to the Family Property Contract.
A Family Property Contract will determine
the duties and powers of the Manager. In particular, the Manager will, without
prejudice to the provisions of the Family Property Contract, have the duties
and powers to:
1.
directly manage the Family Property;
2.
distribute dividends and other benefits generated from the jointly
owned property to Partners in the manner and percentages stipulated in the
Family Property Contract;
3.
deduct from the dividends and other benefits payable to any Partner
any amounts owed by that Partner to the Family Property;
4.
request the Tribunal to remove any Partner from the Family Property
Contract and sell his share in the Family Property to other Partners where that
Partner fails to meet his obligations as stipulated in this Law and in the Family
Property Contract;
5.
represent the Family Property before third parties;
6.
seek the assistance of any person as he deems appropriate to assist
him in managing the Family Property; and
7.
perform any other duties that are stipulated in the Family Property
Contract.
A Manager must exercise the due diligence
a prudent person would exercise in preserving the Family Property. In
particular, the Manager must:
1.
not own or manage directly or indirectly, for his own account or
for the account of third parties, any economic activity that competes with the
economic activities undertaken based on the Family Property
Contract without obtaining the approval of a number of Partners who own at
least seventy-five percent (75%) of the Family Property;
2.
submit to Partners periodic reports on his management of the Family
Property, including on the financial position of the jointly owned property;
3.
not provide the Family Property as security to obtain
personal loans;
4.
not dispose of the jointly owned property, except as
stipulated in this Law and the Family Property Contract; and
5.
meet any other obligations stipulated in the Family Property
Contract.
A Manager will be liable for the remedy
of any damage that may be sustained by the Family Property, by any Partner, or by third parties in
any of the following cases:
1.
his non-compliance with the Family Property
Contract or the terms of his appointment;
2.
failure to meet his obligations as stipulated in this
Law; and
3.
any negligence on his part or fault committed
by him during the performance of his duties in breach of his obligation to exercise the due
diligence a prudent person would exercise.
a. In case of multiple
Managers and where they are required pursuant to the Family Property Contract
or the resolution appointing them to jointly manage the Family Property, the Managers
must make their decisions unanimously unless otherwise agreed by the Partners.
This does not include a Manager acting severally to perform an
urgent duty to avoid a material loss to be sustained
by the Family
Property or a loss of profit for the Partners.
b. In case of multiple
Managers and where each of them is assigned specific functions, each
Manager will be accountable to the Partners or to third parties only for
the acts that fall within the scope of his functions.
c. In case of multiple
Managers and where the Family Property Contract or the resolution appointing
them does not stipulate that they jointly carry out the acts of management, each of
them may perform any act of management and that act
would be deemed valid unless the majority of Managers objects to it before it
is completed.
In case of a tie
of votes, the matter will be referred to the board of directors or to the
Partners, as the case may be, for final determination.
A Manager will be removed in the cases
stated in the Family Property Contract in the manner in which, and by the majority
by which, he is appointed. Where the Manager is appointed pursuant to an
express provision in the Family Property Contract, he may only be removed by the majority of Partners that is
required for amending the contract. Where the Manager is a Partner, he may not
cast his vote on his removal decision.
A Family Property Contract will
be terminated in any of the following cases:
1.
where the Family Property Contract expires in accordance
with paragraph (a) of Article (8) of this Law and the Partners express their
intention not to renew the contract;
2.
where a number of Partners who own at least fifty-one
percent (51%) of the Family Property agree to terminate the contract before its
expiry, unless the Family Property Contract stipulates a different percentage;
3.
if the property subject of the Family
Property Contract is lost, destroyed, or diminished to a level that makes it
impossible for the Family Property to continue in
existence;
4.
if a definitive judgement terminating
the contract is rendered by the Tribunal; or
5.
in any other case as stipulated by the Family Property Contract.
The Tribunal will hear all the disputes
that arise from Family Property Contracts. The Tribunal will be
formed pursuant to a resolution of the Ruler from amongst experts and
specialists in the legal, financial, and family business management
fields. The
Tribunal will have exclusive jurisdiction in the Emirate to hear
these disputes. The resolution forming the Tribunal will
determine the procedure for appointing its members; the functions of
the Tribunal; and the legal effects, and method of implementation, of its judgments.
a.
A Family Property Contract will be interpreted in accordance with the mutual
intent of Partners
and the goals and
objectives for which the Family Property is founded, and in a
manner that ensures the proper management, continuity, development, and
smooth transfer of Family Property across successive generations.
b.
If a Family Property Contract includes a condition or term
that conflicts with this Law, the legislation in force in the Emirate, or
public order and morality, the Family Property Contract will remain valid and the conflicting
condition or term will be deemed null and void.
All Government Entities in the Emirate
must take the necessary action to implement this Law, including to modify their
commercial and real property records, and the title and disposition deeds
related to Family Property, to be consistent with the provisions of this Law
and the legislation in force.
Any provision in any other legislation
will be repealed to the extent that it contradicts the provisions of this Law.
This Law will be published in the
Official Gazette and will come into force on the day on which it is published.
Mohammed bin
Rashid Al Maktoum
Ruler of Dubai
Issued in Dubai on 13 August 2020
Corresponding to 23 Thu al-Hijjah 1441 A.H.
©2021 The Supreme Legislation
Committee in the Emirate of Dubai
[1]Every effort has
been made to produce an accurate and complete English version of this
legislation. However, for the purpose of its interpretation and application,
reference must be made to the original Arabic text. In case of conflict, the
Arabic text will prevail.