Resolving Executive Succession in UAE Family Businesses: The Board of Directors Solution

Abstract

Family businesses, which are uniquely important to the United Arab Emirates (UAE), face the challenges of transitioning to the second or third generation. Conflicts around ownership and/or management of the business can result in destructive family disputes and even disintegration of the businesses. Proactive succession planning is the key to eliminating such conflicts.

Both internationally and regionally, there is a growing push to promote good corporate governance, through regulatory intervention and policy initiatives, as a means of ensuring smooth succession. This article assesses the rules, regulations, and guidelines, including those in relation to corporate governance, as applicable to family businesses in the UAE. A review of UAE legislation and insights from comparative law suggests that the Board of Directors, through a well-defined Nomination Committee, adequate female representation, and independent directors, is the effective solution to resolve executive succession in family businesses.

Both internationally and regionally, there is a growing push to promote good corporate governance, through regulatory intervention and policy initiatives, as a means of ensuring smooth succession. This article1 assesses the rules, regulations, and guidelines, including those in relation to corporate governance, as applicable to family businesses in the UAE. A review of UAE legislation and insights from comparative law suggests that the Board of Directors, through a well- defined Nomination Committee, adequate female representation, and independent directors, is the effective solution to resolve executive succession in family businesses.