Month: January 2022
New Family Business Ownership Governance Law in UAE
HLB HAMT News Team
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The UAE has come up with a new governance law that aims to boost the family-owned business legislative ecosystem in the country. The new economic model, which is far more flexible and sustainable and in accordance with global governance procedures, will not just be a boon to family owned business, but also to the economy of UAE.
The new law, issued by His Highness Sheikh Khalifa bin Zayed Al Nahyan, gives power to family owned businesses to;
- prevent the sale of shares/ dividends to individuals or companies outside the family
- take approval from family partners prior to a shareholder selling their respective equity stake to someone outside the family
Apart from this, the owners of family-owned businesses are also empowered to issue family-owned shares with weighted voting rights and prevent the pledging of family-owned businesses as encumbered assets, to avoid expropriation. Cases wherein non-family members own more than 40 per cent of shares, the new law won’t be applicable.
The owners or co-founders of family-owned business can make use of this law by submitting a request to the Abu Dhabi Department of Economic Development (ADDED). The executive and administrative regulations of the new law will be issued from March 2022.
Commenting on the new law, Mohamed Ali Al Shorafa, Chairman of ADDED, said, “This law is a major pillar in enhancing the vital role played by these businesses in driving economic development. It also provides a legislative framework to ensure the growth and sustainability of family-owned companies in line with the evolving business sector, since it allows ownership by non-family members up to 40 per cent of the capital. This will support the expansion and development of family-owned businesses.”
He added, “Family-owned businesses in Abu Dhabi continue to contribute to economic diversification and the knowledge-based economy, equipped with decades-long experience in the market, strong resilience, and experience in partnering with government entities, as well as investing in sectors targeted by strategic initiatives launched by the emirate of Abu Dhabi.”
Apart from boosting the economy of the country, the new law will aid towards economic diversification as well.
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Gold sourcing controls to be implanted in UAE’s AML Laws
HLB HAMT News Team
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Traders have been flocking to the United Arab Emirates for almost a century in quest of commodities and gold. The Emirate of Dubai earned the title ‘City of Gold’ as a result of this thriving trade. Besides oil, it is the city’s most profitable export. Dubai has taken advantage of its strategic location by establishing jewelry-making enterprises, and gold refineries. Due to the surge in bullion market transactions, financial crimes and other illegal activities have begun to worm their way into the country, causing the economy to be affected.
As a result of this, the government of the United Arab Emirates (UAE) has stated that gold sourcing criteria would be included in anti-money laundering regulations. This is to guarantee that refineries have to get their gold from ethical sources. Furthermore, refineries must conduct periodic audits to guarantee that gold is sourced responsibly.
The FATF, an intergovernmental organization dedicated to preventing money laundering, has pushed for stronger enforcement regulations. The government’s action will most likely target bullion trading linked to criminal activity and other issues. The Anti-Money Laundering (AML) Department of the UAE Ministry of Economy will enforce responsible sourcing standards in all UAE refineries, according to the UAE Ministry of Economy. All refineries would be subjected to a responsible sourcing audit. In addition, the UAE has decided that gold refiners must join a “UAE Good Delivery Standard” certification program, which will set responsible sourcing rules. If a refinery does not meet the regulations, it will be fined.Financial Institutions would gain from the integration of gold sourcing regulations because they would be better able to comprehend and implement complete anti-money laundering controls. We must keep a watchful eye on the financial crimes that are gradually infiltrating our society in order to combat them.
Governments all across the world have taken steps to strengthen the inspection of anti-money laundering (AML) systems and controls. Individuals and businesses must adhere to minimal standards, and failure to do so can result in sanctions and legal repercussions. When done appropriately with the assistance of a professional firm, it can reduce the negative repercussions of unlawful economic activity while also improving financial market stability and resilience.
HLB HAMT is a well-known consulting organization that conducts independent audits of anti-money laundering compliance regimes across a wide range of industries. Our team of professionals can help you develop, execute, and improve your compliance program for financial institutions and other Designated Non-Financial Businesses and professions.
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