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Read more informationComprehensive Legal Framework for Family Businesses: A Game Changer for Sharjah's Economic Growth
The Sharjah Executive Council Resolution No. 31 of 2024, announced on October 1, 2024, establishes a robust legal framework aimed at the regulation, ownership, and governance of family businesses within the Emirate of Sharjah. Designed to ensure the smooth generational transfer and operational stability of family businesses, this resolution plays a critical role in supporting Sharjah's economic growth. Family businesses are a cornerstone of Sharjah's economy, and this resolution enhances their contribution by introducing clear guidelines for registration, ownership, governance, and dispute resolution. Key provisions include the mandatory inclusion of "Family Business" in the Articles of Association (AoA), adherence to specific legal structures like Private Joint Stock Companies (PJSCs) or Limited Liability Companies (LLCs), and the innovative flexibility to issue shares with or without voting rights. This enables families to structure ownership and decision-making power in alignment with strategic goals, such as maintaining operational control within a core group while distributing profits among a broader family network. By reducing regulatory ambiguities, the resolution provides the legal certainty needed to strengthen the role of family businesses in Sharjah’s ambitious economic vision.
One of the most notable aspects of the resolution is its strong emphasis on preserving family ownership and mitigating internal disputes. Article 5 ensures that shares in family businesses cannot be transferred to non-family members, and if shares are acquired by outsiders, the family business is granted the right to reclaim them at either an agreed or expertly assessed value. This provision safeguards the integrity of family ownership while offering a structured mechanism for resolving such situations. Dispute resolution is further strengthened by allowing families to form internal councils of shareholders or family members to reconcile differences amicably. If internal resolution fails, disputes can be escalated to the Sharjah International Commercial Arbitration Centre (TAHKEEM), ensuring expert mediation. Additionally, the resolution permits family businesses to create a Family Charter, detailing rules on ownership, profit distribution, and share assessments, to prevent conflicts. By allowing family properties to be designated as endowments under Sharjah’s Law No. 8 of 2018 and introducing oversight mechanisms, the resolution provides innovative ways to protect family assets and ensure their sustainable management. Altogether, the resolution offers a comprehensive legal framework that not only supports the continuity and operational efficiency of family businesses but also solidifies their role as key contributors to Sharjah’s long-term economic stability and growth.