How layering separates ownership from operation in a family group

Layering describes a group in which family members hold shares in one company, that company holds the shares of the trading companies, and the trading companies hold the assets, licences, staff and contracts. What changes is the location of decisions. Those about who owns, who is paid and who may sell move to the upper layer. Those about pricing, hiring, supply and daily operation stay below.

UAE law names this separation directly. Article 18 of Federal Decree-Law No. 37 of 2022 on Family Companies states that governance of family affairs may be regulated through the establishment of councils and committees such as the family assembly, the family council and the family office, and that such governance is concerned with separating ownership and governance of the family's assets from ownership and governance of the family company. The same article gives those bodies work that belongs at the ownership layer rather than in a trading company: supervising the family's investments, organising its charitable works and community contribution initiatives, and contributing to the control of conflicts of interest and reconciling perspectives in disputes involving family members and partners.

Three provisions of Federal Decree-Law No. 32 of 2021 on Commercial Companies give the separation legal effect. Article 21 records that subsidiaries of holding companies enjoy a legal personality and have their own independent financial liability. Article 269 provides that a holding company may not conduct its activities except through its subsidiaries, keeping the upper layer out of trading. Article 271 sets the direction of ownership: a subsidiary may not be a shareholder in its own holding company, and any allocation or transfer of shares in a holding company to one of its subsidiaries is null and void. A company that already owns such shares and later becomes a subsidiary may continue to hold them only if it is deprived of the right to vote at board and general assembly meetings and disposes of them within twelve months of the holding company's acquisition of it.

Layers do not make ultimate ownership private as a matter of regulatory record. Under Cabinet Decision No. 109 of 2023 on Regulating the Beneficial Owner Procedures, the beneficial owner is the natural person who ultimately owns or exercises ultimate control over a legal person, and Article 5 sets the working test at direct or indirect ownership of twenty-five per cent or more of capital, or the right to vote by twenty-five per cent or more, including through a chain of ownership or control, or control by any other means such as the right to appoint or dismiss the majority of the directors, with the registrar's risk-based approach to be taken into account especially in complex ownership structures. Article 8 requires each legal person to keep a record of its beneficial owners, to update it within fifteen days of learning of a change, and not to give effect to a document relating to a change in its ownership unless a statement is provided on whether the transfer changes the beneficial owner. Article 3 applies the decision to legal persons in the State including the commercial free zones, and exempts companies wholly owned by the federal or local government, or by such companies, along with the financial free zones and the governmental partner.

Two consequences follow from the reporting rules. Information is pulled upward: the holding company prepares consolidated statements each fiscal year, and its auditor may require information and explanations from each subsidiary and that subsidiary's auditor (Articles 272 and 248). Ownership information is pushed outward: a partner or shareholder may ask in writing for the group accounts and receive them within ten days (Article 27).

The limit of layering is that it relocates a decision rather than settling it. A holding company determines which entity holds the shares of the trading companies. It does not determine what the family will do when two branches disagree about direction, when a founder is asked to hand a decision to a board, or when a shareholder asks to be bought out. Those answers are recorded in the memorandum of association and, where a family charter exists, alongside it, and the decree-law provides that where the two conflict the memorandum of association applies and the contradicting charter provision is repealed (Article 6).

Sources, all retrieved 11 August 2026 from the Ministry of Economy and Tourism: Federal Decree-Law No. 37 of 2022 on Family Companies, https://www.moet.gov.ae/documents/20121/0/family+company+english+version+examined+and+correcetd.pdf/5639a956-fe15-6de2-a04e-c8f8ecb6c2bf?t=1674115232919 ; Federal Decree-Law No. 32 of 2021 on Commercial Companies, https://www.moet.gov.ae/documents/20121/376326/Commercial+Companies.pdf/12d14f53-1a3e-47b4-8e70-fac3f672c403?t=1645596097819 ; Cabinet Decision No. 109 of 2023, https://www.moet.gov.ae/documents/20121/0/Cabinet+Decision+109-2023+English+Version+06062024+%281%29.pdf/6ce716e4-1b1e-5f5b-76fd-705207597242?t=1718255048734 .

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.