Why a holding company without agreed shareholder terms leaves the same disputes unresolved

A holding company answers one question: which entity holds the shares of the trading companies. It does not answer who may sell a share and to whom, at what price, who appoints the manager, what happens when a shareholder dies, or what happens when the shareholders cannot agree. A group that has incorporated a holding vehicle and left those questions unwritten has moved the same disputes one level up.

Federal Decree-Law No. 37 of 2022 on Family Companies does not use the term shareholders' agreement. It places those terms in two documents with a defined relationship. The memorandum of association must comply with the decree-law and with the applicable provisions of the companies law or free zone legislation (Article 5). A family charter may contain rules for ownership, the objectives and values of the family, mechanisms for evaluating shares and methods of profit distribution, the education and qualification of family members to work in the company and its subsidiaries, and the consideration of family disputes related to the company. Where the two conflict, the memorandum applies and the contradicting charter provision is repealed. A charter is approved or amended by a majority of the family council, or where there is no council by a majority of the partners from the family, and a copy may be filed with the register (Article 6). The Ministry prepares a guiding memorandum of association and guiding charters for reference (Articles 5 and 6), published in Arabic on its companies legislation page.

The decree-law also supplies default positions that a memorandum of association can displace, so the effect of a holding company depends on what the documents say. Among them:

• a partner wishing to dispose of a share offers it to the remaining family partners first, with an exception for an assignment to a wife or a relative up to the first degree, unless the charter or memorandum provides otherwise (Article 8);
• a disposal to a non-family member requires the approval of partners holding at least three quarters of the capital, unless the memorandum stipulates another percentage (Article 8);
• a portion of annual profits is distributed in proportion to shares at the end of each financial year, unless the memorandum provides otherwise (Article 13);
• the manager is appointed in the memorandum, or failing that by partners holding at least fifty-one per cent of the shares represented at the general assembly, and the positions of chairman of the board and manager may not be combined (Article 14).

For disputes, the decree-law offers an internal forum and a statutory one. The memorandum or the charter may provide for a board formed of partners, family members or third parties to consider disputes among the partners, between the partners and family members and between them and the company, and to attempt reconciliation, with its members and powers defined there. Where no such board is provided, where the parties agree not to refer disputes to it, or where it fails within three months of the dispute being presented unless that period is extended by agreement, the Family Company Disputes Resolution Committee considers the dispute, unless the memorandum provides otherwise (Article 19). That committee is established in each Emirate by decision of the Minister of Justice or the head of the local judicial authority, and is presided over by a judge assisted by two experts specialised in the legal, financial and family company management fields (Article 20). It may take preventive and urgent measures to maintain the company's continuity while the dispute is considered, and its decisions may be appealed before the competent court. The parties may instead agree to arbitration or to litigation before the courts of a financial free zone (Article 19).

Death and inheritance are addressed in the same documents. Unless the memorandum provides otherwise, the company's manager acts as custodian of a deceased partner's shares and supervises the transfer of ownership to the heirs, each according to their legal share (Article 15). An heir may remain a partner in proportion to the inherited share or dispose of it subject to Article 8 (Article 24). Where a provision is lacking or ambiguous, both are interpreted according to the common intention of the founders and partners and the objectives for which the company was established (Article 22).

Sources, retrieved 11 August 2026: Federal Decree-Law No. 37 of 2022 on Family Companies, English text published by the Ministry of Economy and Tourism, https://www.moet.gov.ae/documents/20121/0/family+company+english+version+examined+and+correcetd.pdf/5639a956-fe15-6de2-a04e-c8f8ecb6c2bf?t=1674115232919 ; the ministry's companies legislation page, which lists those model instruments, https://www.moet.gov.ae/en/companies-legislations .

This content is written with law firms as educational material only. It is not advice, no structure described here has been verified or endorsed by the programme, and a family considering any of it should take its own legal, tax and accounting advice on its own facts.