Sharjah has passed an Executive Council Resolution that governs the family businesses in the Emirate. They have introduced the resolution within the legal framework to support and facilitate the family-owned businesses across the city. Sharjah understood the significance of family-owned enterprises in Sharjah’s economy. Thus, a New Sharjah Executive Council Resolution is passed that overall contributes to the city’s GDP and overall economic growth.
Nonetheless, the legal system will now provide extensive guidelines concerning the structure, ownership, and rules that govern the family-owned businesses in Sharjah.
Primarily, the main goal is to ensure the swift running of the family business. Further, it supports the operations of generational businesses and facilitates them across the generations. Therefore, a thorough detailed mechanism is introduced to secure long-term investment in the city.
Nonetheless, it also plays a crucial role in stability, growth, and overall success of the country. With the new resolution there will be continuity and an immense economic contribution towards the economy. Another prominent objective of the New Resolution is to bolster the continuity of the family businesses in Sharjah. The reforms have allowed the family-owned businesses in Sharjah to prosper, grow, and strive for a better future.
Besides, it ensures a smooth transition between different generations without affecting their functionality. There will be no interruption in their operations whatsoever.
The recently passed New Sharjah Executive Council Resolution provides a strong foundation for family-owned enterprises in Sharjah which promotes economic stability and sustainability. It does not allow for dwindling economic progress during the major changes taking place. Nevertheless, the new law has supported a concise and clear registration process for family business. This supports them in formal registration and also serves the operational specifications.
According to the registration requirements, the family owned enterprises in Sharjah require Articles of Association AOA for its identification. Therefore, it is essential to draft an AOA for explicit representation of family business. Besides, there is minimal documentation and an easy registration procedure for family businesses. Additionally, other forms like Private Joint Stock Companies (PJSC) or Limited Liability Companies (LLC) are required under the specific requirements.
Once these documents are prepared, the family business can easily qualify and progress with business operations. The organizational structure is designed in a way that encourages fairness, clarity, and transparency. Besides, the legal framework ensures accountability by redefining the legal boundaries for family-owned enterprises in Sharjah.
It offers greater flexibility to the company operations and to the shareholder’s rights. Family businesses offer leverage to both voting and non-voting shareholders. They can easily align their shareholding rights with the family objectives. Furthermore, with the new resolution it permits family businesses to issue the voting rights and profit entitlements of their choice. This is a systematic approach that supports the family-owned businesses in Sharjah to exercise better control within the core group.
However, it also enables the distribution of financial benefits to the other family members as needed. It is supported by creating a vivid distinction between voting shares on non-voting shares. Now, the family businesses in Sharjah can easily and conveniently structure their decision-making authority to the rest of the shareholders who are directly involved in the business functions. It also supports the family’s participation in profits and overall company.
It further protects the Family Ownership via the concept of Share Buy-Back Provisions. It is done to preserve the family control. Under the new reform, it is prohibited for shareholders within the family business to transfer the shares outside the family. It allows for the business shares to remain within the family. In case of any violation from a non-family member, it allows the family members to repurchase those shares to allow the business to remain within the family ties.
For instance, if a shareholder has decided to waive its shareholding and no other family member is interested, the family business is required to buy back those shares. It advocates for a family-centric business in Sharjah. It also secures the ownership within the family member’s for a longer time period. The New Sharjah Executive Council Resolution has introduced an effective and lucrative way towards a dispute resolution mechanism. It is understood that there are lots of complications involved in the family business and thus dynamics are quite complex.
The new reform supports the formation of a council that is based on family members from the shareholders in dispute matters. It offers mediation during internal conflicts and disputes. This paves the way for cooperation among the family members. Moreover, it also reduces the tensions and friction present among the family members.
It also promotes the Sharjah International Commercial Arbitration Centre (TAHKEEM). It is introduced to further support the family business. In case, a family council is unable to resolve the conflict on its own, it will permit them to resolve the dispute with the guidance and assistance of the arbitration center.
Sharjah International Commercial Arbitration Centre (TAHKEEM) helps in resolving prolonged disagreements and conflicts that can sabotage businesses. This allows the family-owned enterprises in Sharjah to have easy access to and support for professional arbitration services.
Furthermore, the Family Charter and Articles of Association AOA allow the family businesses in Sharjah to formulate a Family charter. It will assist in outlining the possible family ownership, profit distribution, and share valuation.
It helps in preventing potential disputes and disagreements. It also sets clear expectations, goals, and responsibilities for each family member.
This supports the secure management of family assets. It also minimizes family conflicts and ensures better management, effectiveness, and efficiency.