Boards, board committees and what independence is taken to mean in the UAE

Article 14(2) of UAE Federal Decree-Law No. 37 of 2022 concerning Family Businesses allows the articles of association of a family business with limited liability to stipulate the formation of a board of directors to manage the business. The same provision leaves to the articles the rules, controls and conditions governing the board's formation, its powers, membership terms and fees, dismissal and replacement, the mechanism for making decisions, the board's committees and their powers, and the criteria for membership of the board and those committees.

Two consequences follow. Subject to Article 14(4), the composition standard for a family business board, including any requirement of independence, is a matter for the articles rather than something the Decree-Law prescribes. Board committees are likewise creatures of the articles and of the board.

Article 14(3) sets one fixed rule. A board, where one exists, has a chairman, and the director follows the chairman as the board's representative unless the articles stipulate otherwise. Board membership and management of the business may be combined; the chairmanship and the management may not. Article 14(4) sets minimum requirements of legal age, full capacity, good conduct, and the knowledge and experience reasonably expected from another person in the same position.

Article 16(2) requires the director to be fair in dealing with all partners without prioritising one partner's interest over another, and to be independent in opinion, free from whims and personal interests, placing the interest of the business above any other consideration. A duty of independent judgement therefore attaches to the director, separately from whether any board member is independent of the family.

Independence is defined in UAE regulation for a different category of company. The Governance Guide approved by Securities and Commodities Authority Chairman Decision No. 3/Chairman of 2020 governs the public joint stock company listed in the market. It defines an Independent Board Member as a member that has no relationship with the company, its senior executive management, its auditor, parent company, subsidiaries, sister company or affiliate company in a manner that may lead to financial or moral benefit that may affect its decisions. Article 9(2) requires board members collectively to have an appropriate balance of skills, knowledge, competencies, experience, diversity and independence, and Article 9(3) leaves board formation, the number of members and the term of membership to the articles of association. Article 9(5) requires the articles to determine which members are executive, non-executive and independent, and imposes a proportion requirement: the English text retrieved provides that the majority of board members shall be non-executive independent members.

Article 58 makes the permanent committees the Nomination and Remuneration Committee and the Audit Committee, each composed of at least three non-executive board members, of whom at least two are independent whatever the committee's size, and each chaired by an independent member. The board chairman may not be a member of either. Article 58(3) requires committees to be formed under board procedures defining the committee's task, duration of work, powers and how the board controls it, and requires a written report to the board on its procedures, findings and recommendations. Article 59(3) places continuing responsibility for ensuring independence with that committee.

That Guide does not govern a registered family business. Article 3(2) of the Decree-Law excludes the joint stock company and the partnership company from its scope, so a business registered under it is not the listed public joint stock company the Guide addresses. The Guide is a reference point for what UAE regulation treats as independence and committee practice, not a rule binding a family business. Commentary published in September 2025 reports that Chairman Decision No. 24 of 2025, effective 26 August 2025, permits the chairman and chief executive roles to be combined subject to conditions including heightened board independence.

The distinction between a board committee and a family body remains. The councils and committees described in Article 18(1) concern family affairs and the family's relationship with the business, and are not among the organs Article 14 assigns to manage it. The written report required by Article 58(3) also separates a committee that operates from one that is named, since a committee that does not meet produces no report.

Sources, all retrieved 11 August 2026:

• Federal Decree by Law No. 37 of 2022 Concerning the Family Businesses, full text, UAE Legislation portal: https://uaelegislation.gov.ae/en/legislations/1608
• SCA Chairman Decision No. 3/Chairman of 2020 approving the Joint Stock Companies Governance Guide, full text: https://www.ecgi.global/sites/default/files/codes/documents/chairman_of_authoritys_board_of_directors_decision_no._3_chairman_of_2020_concerning_approval_of_joint_stock_companies_governance_guide_3.pdf
• Legal commentary on SCA Chairman Decision No. 24 of 2025, secondary source, 11 September 2025: https://www.clydeco.com/en/insights/2025/09/uae-corporate-governance-reform

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