By Sam Bridge
New law should encourage family-owned companies to convert into joint stock companies, says Abu Dhabi Securities Exchange CEO
The CEO of Abu Dhabi Securities Exchange (ADX) has hailed a new draft law amending provisions within the Agency Law, saying it is a "pivotal step forward" towards enhancing the UAE’s trade and investment environment.
Khalifa Salem Al Mansouri said the amended law intends to encourage family-owned business to join financial markets and for UAE nationals to invest in public shareholding companies by granting them with the necessary statutory protection.
Family-owned businesses contribute 60 percent of the UAE’s GDP and 80 percent of the emirates’ workforce, according to PwC, with $1 trillion believed to be passed down from one generation to the next within a decade.
The Agency Law regulates commercial agency and distribution agreements within the country. On Saturday, the UAE Cabinet approved a draft law amending provisions within the law to enhance the capabilities and continuity of family businesses, as well as to establish rules of governance and protection from defaulting.
"The move will directly benefit ADX's customer-centric strategy in contributing towards bolstering the UAE economy by increasing investment opportunities through the provision of both high quality services and tailored financial products," Al Mansouri said.
"The new law should encourage family-owned companies to take advantage of ADX's advanced technological infrastructure to convert into joint stock companies," he added.
Susie Abdel-Nabi, partner in Clyde & Co's Middle East Dispute Resolution teamm said the amendments, which apply to UAE nationals, foreign principals, those in the business sector and public shareholding companies, will provide the Emirati family-owned SMEs with the least possible risk in case of defaults, according to
“It appears that part of the amendments aim to extend protection to UAE family-owned SMEs and UAE shareholders when they default and to further protect their interests,” Abdel-Nabi said.For all the latest market news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.