A new UAE Trust law passed late last year will support the development of the onshore wealth management sector in the country, a finance ministry official said.
The Federal Law No. (19) of 2020 on trusts was enacted by President Sheikh Khalifa bin Zayed in September last year.
“The decree-law regarding trusts was an important addition to the UAE’s advanced legislative structure,” Younis Haji Al Khouri, undersecretary of the Ministry of Finance, said.
“[It] supports the wealth management sector in the country and provides new mechanisms for managing companies and family funds. It also encourages the allocation of charitable trusts.”
The law provides new mechanisms for managing companies and family funds
Although trust laws exist in the UAE’s two financial free zones, the Dubai International Financial Centre and Abu Dhabi Global Market, which are based on common law, this is the first time the UAE has granted full recognition to similar arrangements within the onshore legal system, Richard Catling, a partner at law firm Al Tamimi & Company, said.
The trust law allows companies or people who own capital or other assets to transfer these in the form of a trust to a trustee, who will be responsible for managing them. A trust deed document will be created, which is recorded electronically, to oversee the assets, whether moveable or property, the ministry said.
“Over the past three decades, the UAE economy has increasingly been exposed to, and integrated with, sophisticated international business and financial practices and markets,” Mr Catling, a partner in corporate commercial and family business practice, said.
Many UAE residents are already familiar with trusts and there is already appetite within the country for these products, which range from private family trusts to publicly-traded mutual funds, real estate investment trusts and securitisation structures, Mr Catling said.
“Although these legal products are available in the UAE’s financial free zones [DIFC and ADGM], the real weight of UAE economic activity and assets lies outside these free zones in the onshore areas. Free zone trust arrangements cannot effectively govern dealings or enforce established ownership rights over UAE onshore assets, whether these comprise cash, securities, land, moveable assets or legal rights,” he added.
The UAE Cabinet announced in October last year that family-owned companies would be among the biggest beneficiaries of the new regulations, as they will allow founders to carry out succession planning and secure the long term future of company assets.
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 to a trust.
Dr Hussam Al Talhouni, legal adviser at the Office of the Minister of Finance, said the necessary instruments for the administration of trusts is already being put in place.
“The trust registry for family businesses has already been created while we are working on the registry for private trusts with the Emirates Securities and Commodities Authority. It should be ready soon,” Mr Al Talhouni added.
The real weight of UAE economic activity and assets lies outside these free zones in the onshore areas
The law will help fill a number of “obvious gaps in the onshore legal system” and will likely spur major developments in onshore law and practice, Mr Catling added.
Welcoming the new law, the DIFC said it makes the UAE a sound platform for families to plan for the future of their businesses and descendants.
“The new federal law was particularly significant because it was the first time the common law concept of the trust had been included within the civil law regimes of the Arab world,” the DIFC said in a statement.
The entity added that the new law recognised the operation of DIFC and ADGM trusts, as well as foreign trusts, within that part of the UAE outside the financial free zone.
In recent months, the UAE's leadership has made several changes to legislation related to commerce. These include amendments to the commercial companies’ law that allows 100 per cent foreign ownership of businesses and commercial transactions legislation such as the decriminalisation of cheques. The government has also amended bankruptcy and consumer protection laws.
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Zakat: an Arabic word meaning ‘to cleanse’ or ‘purification’.
Nisab: the minimum amount that a Muslim must have before being obliged to pay zakat. Traditionally, the nisab threshold was 87.48 grams of gold, or 612.36 grams of silver. The monetary value of the nisab therefore varies by current prices and currencies.
Zakat Al Mal: the ‘cleansing’ of wealth, as one of the five pillars of Islam; a spiritual duty for all Muslims meeting the ‘nisab’ wealth criteria in a lunar year, to pay 2.5 per cent of their wealth in alms to the deserving and needy.
Zakat Al Fitr: a donation to charity given during Ramadan, before Eid Al Fitr, in the form of food. Every adult Muslim who possesses food in excess of the needs of themselves and their family must pay two qadahs (an old measure just over 2 kilograms) of flour, wheat, barley or rice from each person in a household, as a minimum.
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From Beirut and Amman to London and now Dubai, hairstylist George Massoud has seen the same mistakes made by customers all over the world. In the chair or at-home hair care, here are the resolutions he wishes his customers would make for the year ahead.
1. 'I will seek consultation from professionals'
You may know what you want, but are you sure it’s going to suit you? Haircare professionals can tell you what will work best with your skin tone, hair texture and lifestyle.
2. 'I will tell my hairdresser when I’m not happy'
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Are non-fungible tokens a currency, asset, or a licensing instrument? Arnab Das, global market strategist EMEA at Invesco, says they are mix of all of three.
You can buy, hold and use NFTs just like US dollars and Bitcoins. “They can appreciate in value and even produce cash flows.”
However, while money is fungible, NFTs are not. “One Bitcoin, dollar, euro or dirham is largely indistinguishable from the next. Nothing ties a dollar bill to a particular owner, for example. Nor does it tie you to to any goods, services or assets you bought with that currency. In contrast, NFTs confer specific ownership,” Mr Das says.
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