If a dispute has broken out over the family company after the founder's death, if an heir refuses to sign the amendment to the memorandum of association, or if one sibling has sold his stake to someone outside the family, the direct answer is this: family business disputes in the UAE now follow a dedicated legal path that does not begin in court. Under the Family Companies Law the dispute goes first to the family council, if one exists, then to the Family Companies Disputes Committee of the emirate, and reaches the courts only on appeal from the committee's decision or by agreement to arbitrate. At every stage you hold specific rights bound by short deadlines: 60 days to redeem a stake sold to an outsider, 3 months to regularise the company after a death, and 3 months before the committee. This article explains, from the standpoint of a corporate lawyer in Dubai, what to do in each type of dispute and how to protect your rights without bringing the company to a halt.
For the law itself and the conditions of registration, see our articles Family Business Law: Governance, Ownership and Continuity and Family Business Law in the UAE: Ownership, Governance and Business Continuity; here we deal with what happens once the dispute actually arises.
Why do family business disputes arise in the UAE?
Most of the disputes that reach our office are caused not by the law but by its absence: a template memorandum of association untouched for twenty years, no family charter, no mechanism for valuing stakes, and a founder who ran everything personally. When the founder dies or falls ill, or the second generation disagrees, questions erupt that the papers cannot answer: who manages? how are profits distributed? may any of us sell? That is the moment a family disagreement becomes a corporate dispute. See our partnership agreement template between partners to see what should have been in writing.
The founder's death: what happens to the stakes and the management?
The rule for a limited liability company under the Commercial Companies Law is that a partner's death does not dissolve the company; his stake passes to his heirs, and a legatee is treated as an heir. For a family company entered in the Register, the Family Companies Law adds that the company's manager stands in the place of the guardian over the deceased partner's stakes, supervises their transfer to the heirs, each according to his lawful share, and amends the memorandum of association, after settling any debts attached to those stakes. The partners are given 3 months from the date of death to regularise the company's position, extendable by decision of the competent authority.
In practice, the first thing the family needs is a judgment from the estates judge proving the death and identifying the heirs; without it the licensing authority cannot amend the licence and the bank will not lift the freeze on company accounts on which the deceased was a signatory. The shares are detailed in Islamic Inheritance in the UAE: Distribution and Heirs' Rights, the expatriate's position in What Happens to the Assets of a Deceased Expat Without a Will, and the importance of a will for non-Muslims in Registration of Wills in Dubai for Non-Muslims. Most importantly, the law treats the founder's arrangements for transferring stakes during his lifetime, by sale or gift, as valid and not contrary to the inheritance rules, and that is the widest door to avoiding the dispute altogether.
An heir or partner is blocking decisions: what do I do?
Under the Family Companies Law an heir is entitled to remain a partner to the extent of the inherited stake or to dispose of it, but he is not entitled to paralyse the company. If an heir refuses to sign the amendment to the memorandum or to attend the general assembly, the answer is not to wait but to set the path in motion: refer the dispute to the family council, then to the committee, which has the power to take precautionary and urgent measures that preserve the company's continuity and prevent its business from stopping while the dispute is heard. If the obstructing party is a long-standing partner rather than an heir, see the options in Partner Exit from the Company: Withdrawal or Buy-out.
My brother sold his stake to an outsider: can I redeem it?
Yes, and this is one of the most important innovations of the Family Companies Law. A partner wishing to dispose of his stake must first offer it to the other family partners, and it may not be sold to a non-family member except with the approval of partners holding three-quarters of the capital, unless the memorandum sets a different ratio. Where a third party acquires the stake in breach of these rules, the remaining partners may, within 60 days of the acquisition, seek to redeem it, each in proportion to his stake, at the agreed price or the price fixed by the committee. In a limited liability company not registered as a family company, the period under the Commercial Companies Law is 30 days from the manager's notification. The difference between the two routes is explained in Partnership Agreement or Company Purchase in Dubai.
I was excluded from management or denied profits: what are my rights?
The Family Companies Law obliges the company to distribute part of its annual profits to the partners, each in proportion to his stake, unless the memorandum provides otherwise, and it obliges the manager to be fair between partners and not to favour one over another, to submit an annual report on his management, and not to compete with the company or borrow against its assets. Breach of these duties entitles the aggrieved partner to seek the manager's removal or an order for compensation from the court. If the exclusion was carried out through an old power of attorney still being used after the founder's death, see Misuse of a Power of Attorney, and the limits of a manager's liability in The Liability of the Manager of a Limited Liability Company.
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The mistake that costs families most is filing for dissolution of the company as a first reaction. A family company lives on its reputation, and the first public hearing costs it its clients and its banks. The path the law has drawn, from the council to the committee to arbitration, was designed to settle the dispute while the company keeps working, and our job is to use it quickly, before the disagreement becomes a rupture.
Lawyer Awadh Almheiri
The path for resolving family business disputes, step by step
Documentation
Gather your papers before any step
The memorandum of association with its latest amendment, the family charter if one exists, the trade licence, the judgment identifying the heirs, three years of financial statements, and the minutes of the general assembly. Most disputes are decided by what is written in the memorandum, which prevails over the charter in the event of conflict.
Settlement
The family council or conciliation council
Where the memorandum or the charter provides for a council of partners, family members or third parties to consider disputes, the dispute is referred to it first, and it has 3 months to conciliate, extendable by agreement. In Dubai, check whether your dispute falls within what we explained in
Is Mediation Mandatory Before Filing Certain Lawsuits in Dubai.
Complaint
The Family Companies Disputes Committee
Where no council exists, or it fails within 3 months, or the parties agree to bypass it, the committee formed in each emirate and chaired by a judge has jurisdiction over all disputes between partners, family members and the company arising from the memorandum, the management or the ownership. It decides within 3 months, extendable for a similar period, may take precautionary and urgent measures preserving the company, its reputation and its financial position, and may value stakes through experts where the price is disputed.
Litigation
Appeal, arbitration or the courts
The deadlines that decide family business disputes
60 days
to seek redemption of a stake acquired by someone outside the family, from the date of acquisition
3 months
to regularise the company after a death, interdiction or bankruptcy, and likewise before the family council and then before the committee
30 days
to redeem a stake in a limited liability company not registered as a family company, from the manager's notification
Practical advice before the dispute reaches the committee
Register the company in the Family Companies Register
The 60-day redemption right, the three-quarters requirement for a sale to an outsider, Class (A) and (B) stakes and the committee's jurisdiction are all advantages the company enjoys only once it is entered in the Register by decision of the majority partners.
Do not petition for dissolution as a first step
Ask the committee for precautionary measures: a ban on disposing of assets, appointment of an auditor, an order that the manager submit reports. Dissolution and liquidation destroy value for everyone, while protective measures preserve it until the decision is issued.
Separate the estate from the company
The heirs' dispute over their shares goes to the estates judge; their dispute over the company's management and profits goes to the committee. Confusing the two routes wastes at least a year.
Write the charter today, not tomorrow
The family charter is adopted by a majority of the family council or a majority of the partners, and may fix the mechanism for valuing stakes, distributing profits and the conditions for family members to work in the company. Drafting it costs far less than any dispute; see
Drafting a Partnership Agreement for a Company in Dubai.
Legal references
Federal Decree-Law No. 37 of 2022 concerning Family Companies
Federal Decree-Law No. 32 of 2021 concerning Commercial Companies
Federal Decree-Law No. 41 of 2024 promulgating the Personal Status Law
Federal Decree-Law No. 42 of 2022 promulgating the Civil Procedure Law
Federal Law No. 6 of 2018 concerning Arbitration
Facing a dispute in a family company in the UAE? Consult a corporate lawyer in Dubai before the business stops
AWADH ALMHEIRI LAW FIRM AND LEGAL CONSULTATIONS represents heirs and partners before family councils, the Family Companies Disputes Committees, arbitral tribunals and the courts, and drafts the family charters and amendments to memoranda of association that prevent the dispute before it arises.
AWADH ALMHEIRI LAW FIRM AND LEGAL CONSULTATIONS
Frequently asked questions about family business disputes in the UAE
QIs the family company dissolved by the founder's death?
No. The status of the family company is not lost by the death, interdiction or bankruptcy of a partner unless otherwise agreed in the memorandum of association; his stake passes to his heirs, and the partners are granted 3 months to regularise the company's position.
QWho manages the family company after the founder's death?
The manager appointed in the memorandum continues, and stands in the place of the guardian over the deceased's stakes until they are transferred to the heirs. Where no manager is appointed, one is appointed by decision of partners holding at least 51% of the stakes represented in the general assembly, unless the memorandum provides a different ratio.
QCan an heir sell his stake to someone outside the family?
He may dispose of his inherited stake, but subject to the restrictions of the Family Companies Law: offering it first to the partners, and no sale to a non-family member without the approval of the holders of three-quarters of the capital, failing which the remaining partners may redeem it within 60 days.
QWhat is the Family Companies Disputes Committee?
A committee formed in each emirate by decision of the Minister of Justice or the head of the local judicial authority, chaired by a judge assisted by a legal and a financial expert, with jurisdiction over all disputes between partners and family members and a family company entered in the Register; its decisions are appealable.
QHow long does the committee take to decide?
3 months, extendable for a similar period on a reasoned request, during which it may take precautionary and urgent measures preventing the company from stopping or its reputation and financial position from being harmed.
QCan we agree on arbitration instead of the committee?
Yes. The parties may agree on arbitration under the Arbitration Law, or on resorting to the courts of the financial free zones, by way of exception to the committee's jurisdiction.
QWhat if some heirs refuse to sign the amendment to the licence?
An heir cannot paralyse the company. The matter is referred to the family council, then to the committee, which may issue urgent measures preserving the company's continuity; in companies not registered as family companies, recourse is to the competent court.
QAm I entitled to a share of the profits if I do not work in the company?
Yes. Profits belong to the partner in proportion to his stake, not his work, and the law obliges the family company to distribute part of its annual profits unless the memorandum provides otherwise; your stake may be of Class (B), which carries profits without voting rights.
QCan the family company buy the stake of the partner in dispute?
It may purchase no more than 30% of its stakes to redeem the stake of a partner wishing to sell, or who is bankrupt, where no buyer exists among the partners, with the approval of the majority of stakes represented in the general assembly.
QDoes the Family Companies Law apply to a company in a free zone?
It applies to the extent that it does not conflict with the legislation of the relevant free zone, while disputes of family companies registered in the financial free zones are subject to the legislation and courts of those zones.
QWhat if the family charter conflicts with the memorandum of association?
The memorandum prevails, and any provision of the charter conflicting with it or with the law is void; we therefore recommend reviewing the memorandum and the charter together at every amendment.
QWhen do I need a corporate lawyer in Dubai in a family dispute?
From the moment you are asked to sign an amendment to the memorandum, notified of a sale of a stake, or denied profits: the deadlines are short (30 and 60 days and 3 months) and missing them forfeits the right to redeem or to object.
Legal Disclaimer
This content is prepared for legal awareness and community education and does not constitute legal advice on any particular matter. The rules differ according to the wording of the memorandum of association and the charter, the company's form and the emirate of registration, so consult a licensed lawyer before taking any step. In the event of any discrepancy between this English text and the original Arabic version, the Arabic text shall prevail.
Dubai
AWADH ALMHEIRI LAW FIRM AND LEGAL CONSULTATIONS, a corporate lawyer in Dubai specialised in family business disputes in the UAE: transfer of family company stakes to heirs, redemption of a stake sold to an outsider, removal of a family company manager, drafting the family charter, and representation before the Family Companies Disputes Committee, arbitral tribunals and the Dubai Courts.
The other Emirates
We handle family business disputes and heirs' and partners' cases in Abu Dhabi, Sharjah, Ajman, Umm Al Quwain, Ras Al Khaimah and Fujairah, before the Family Companies Disputes Committees of each emirate, the estates judge and the competent courts.
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