A named successor is not a transfer mechanism

Naming a successor is an intention. Moving a share is a procedure that ends in a register entry. The instruments that carry a name into effect, and the registrations that make them good against third parties, are set out in the companies legislation.

The Commercial Companies Law sets out what the paperwork has to do. The memorandum of association and any amendment are drafted in Arabic and attested by the competent authority, failing which the memorandum or the amendment is null and void (Article 14(1)). The memorandum and any amendment take effect after being registered in the commercial register, and an unregistered memorandum, or an unregistered item within it, has no legal effect against third parties (Article 15). A partner may assign or pledge a stake in a limited liability company in accordance with the memorandum and under a formal instrument duly attested, and the assignment or pledge is valid against the company and against third parties only as of the date it is recorded in the commercial register (Article 79). Where the assignee is not a partner, the others are notified through the manager, and each may request redemption within thirty days of the manager being notified of the agreed price, with a disputed price assessed by experts nominated by the competent authority, and once that period expires without redemption the partner may dispose of the stake freely (Article 80).

The same law allows the constitution to carry succession mechanics. Partners in a limited liability company or shareholders in a private joint stock company may include in the memorandum or articles a provision permitting one or more of them to oblige the others to sell to a third party once specific, pre-agreed conditions are met, or a provision granting a right to join an existing sale on the same terms agreed with the purchaser (Article 14(4)(a)). They may also include a provision regulating the mechanism for dealing with the stakes or shares of a deceased partner or shareholder, including a pre-emptive right for the other holders or the company to purchase at the price agreed with the heirs, with valuation by court-appointed experts where there is disagreement (Article 14(4)(b)).

Federal Decree-Law No. 37 of 2022 layers further conditions on movement in a registered family business. A partner wishing to dispose of a share offers it to the rest of the partners from the family, with an exception permitting a waiver of the share, with or without compensation, to a wife or a relative up to the first degree, unless the charter or the articles provide otherwise (Article 8(1)). Disposal to a person outside the family requires the approval of partners who own at least three quarters of the capital, unless the articles provide for another percentage (Article 8(2)). Where a third party outside the family acquires a share in other cases, the remaining partners may request its recovery within sixty days of the acquisition, at an agreed value or a value the committee determines where there is no agreement, and if none of them does so the share is offered to the family business, and after thirty days from that offer a third party may obtain it (Article 8(3) and 8(4)).

Two provisions mark the difference between a lifetime mechanism and a testamentary wish. On death, and unless the articles of association provide otherwise, the director takes the place of the trustee over the shares of the deceased partner and supervises the transfer to the heirs before amending the articles (Article 15(2)). During life, the organisation by family members of the ownership and transfer of shares or assets, whether by sale, donation or usufruct, is expressly not in violation of the Personal Status Law, whenever it is accomplished during the life of the acting partner (Article 24(1)).

Where the articles and the charter conflict, the articles apply and the conflicting provision is repealed from the charter (Article 6(3)).

The provisions recited above turn on the same variables rather than on a name: a trigger event, the person entitled to act and the majority required, the price or the route to a price where there is no agreement, the period within which a right is exercised or lost, the instrument to be executed and its form and attestation, and the register in which that instrument is recorded.

Sources, retrieved 11 August 2026:

• Federal Decree-Law No. 37 of 2022 on Family Businesses: https://uaelegislation.gov.ae/en/legislations/1608
• Commercial Companies Law, Federal Decree-Law No. 32 of 2021, consolidated text: https://uaelegislation.gov.ae/en/legislations/1542

This article is educational. It is written with law firms and describes mechanisms in general terms, and the programme has not verified or endorsed any structure described here. A family should take its own legal, tax and Sharia advice.