The UAE Cabinet approved a new law regulating the country’s growing wealth management sector, which aims to further support the industry, protect investors and attract foreign investment.
The Federal Decree Law on Financial Covenants, which excludes financial free zones, was announced by Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai, on the Dubai Media Office's Twitter account on Sunday.
The law provides a legislative framework that will boost the performance of the wealth management sector and enable a competitive environment, according to the statement, which was also published by state news agency Wam.
“The decree comes within the government's continuous efforts to raise the efficiency of financial legislation and policies in the country and provides a competitive environment,” the statement said.
“[This will] contribute to preserving capital and investing it inside the country, and attracting foreign investments, leading to the provision of a safe and developed economic climate, and the diversification of the tools available to exploit and protect wealth.”
Keren Bobker, an independent financial adviser with Holborn Assets and columnist for The National, said the new law would boost investor confidence in the UAE.
“This should be a first step in bringing better options to investors," Ms Bobker said.
"I am always supportive of changes that increase the level of professionalism and accountability in the UAE. This should give people confidence to invest in or via the UAE, so that should be beneficial.”
According to the UAE Cabinet statement, family-owned companies will be among the biggest beneficiaries of the new regulations as they will allow founders to plan long-term for the future and for the continuity of company assets.
“The law provides capital owners with an integrated system that enables them to manage their wealth as a financial trust by competent and qualified persons or institutions,” the statement added.
The new decree also covers charitable and private trusts that deal in securities on financial markets, as well as retirement funds to ensure that benefits are provided to beneficiaries in exchange for contributions.
“The law will support the legislative structure of the financial and banking sector and [will] enhance its competitiveness by adding new financial and investment products and instruments that meet the requirements of the current situation and keep pace with global changes, especially in light of the urgent need to apply innovative laws and legislative frameworks,” the statement added.