Family succession and business succession are separate mechanisms

Two questions sit inside the phrase family succession, and they are often asked as one. Who will own the shares. Who will run the company. They are answered by different bodies of law and recorded in different documents, which is why the two are treated as separate components.

Ownership moves through inheritance law. Where a partner in a registered family business dies, Federal Decree-Law No. 37 of 2022 provides that, unless the articles of association provide otherwise, the director of the company takes the place of the trustee over the shares of the deceased partner, supervises the procedures for transferring their ownership to the heirs, each according to his legal share, and takes measures to amend the articles of association after settling any rights or debts related to those shares (Article 15(2)). The heir may then remain a partner to the extent of the inherited share, or dispose of that share subject to the transfer conditions in Article 8 (Article 24(2)).

Who the heirs are, and in what proportions, is decided outside the company. Under the Personal Status Law, the rights pertaining to an estate rank in order: preparation of the funeral, settlement of debts, execution of the will within a one third limit unless the heirs consent to exceed it, and division of the remainder among the heirs (Article 201). Federal Decree-Law No. 41 of 2022 on Civil Personal Status, in force since 1 February 2023, applies to non-Muslim citizens and to non-Muslim foreigners residing in the State in matters including inheritance and wills, unless one of them adheres to the law of their home country (Article 1(1)). In the absence of a will, half of the inheritance devolves to the husband or wife and the other half is distributed equally among the children with no differentiation between male and female (Article 11(2)), and an heir of a foreigner may request the application of the law applicable to the estate unless there is a registered will to the contrary (Article 11(3)). The Civil Transactions Law refers succession to the law of the country to which the decedent belonged at the time of death (Article 17(1)).

None of that decides who runs the business. A family business is managed by a director appointed in the articles of association or, where the articles contain no such provision, by a decision of partners owning at least 51 per cent of the shares represented at the general assembly meeting, unless the articles stipulate another percentage. That director may be one or more persons, from among the partners or from others, and may be a legal person (Article 14(1)). A director or board member is to be of legal age, of full capacity, of good conduct, and to possess the knowledge and experience that could reasonably be expected from another person in the same position (Article 14(4)). Dismissal follows the cases specified in the appointment contract or the articles, and where the appointment was for an indefinite period by express provision in the articles, dismissal requires the same majority as an amendment to the articles (Article 17).

A single sentence naming a successor therefore answers at most one of the two questions.

• Family succession concerns who inherits, in what proportions, under which law, and how that is recorded.
• Business succession concerns who holds the management mandate, on what majority, with what powers, and where that is written.

The same law treats the two in different forums. Article 18 contemplates family assemblies, councils and family offices, concerned among other things with separating the ownership and governance of family assets from the ownership and governance of the family business. Article 6 provides that a family may have a charter that includes rules for family ownership, goals and values, mechanisms for evaluating shares, methods of profit distribution, and the education and qualification of family members who work in the business.

Continuity of the entity is not continuity of control. The character of the family business is not extinguished by the death, interdiction, bankruptcy or insolvency of one of the partners, unless otherwise agreed in the articles of association (Article 23(3)). Whether anyone holds authority to sign on the following day is a separate question, answered by the articles.

Sources, retrieved 11 August 2026:

• Federal Decree-Law No. 37 of 2022 on Family Businesses: https://uaelegislation.gov.ae/en/legislations/1608
• Personal Status Law: https://uaelegislation.gov.ae/en/legislations/2770
• Federal Decree-Law No. 41 of 2022 on Civil Personal Status: https://uaelegislation.gov.ae/en/legislations/1586
• Civil Transactions Law, Federal Decree by Law No. 25 of 2025: https://uaelegislation.gov.ae/en/legislations/4011

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.