Resolving Executive Succession in UAE Family Businesses: The Board of Directors Solutions
By David Chekroun, Megha Bansal & Tanya Bansal
Journal of Law in the Middle East · LexisNexis · N°2 · 2022 · pp. 31-62
This piece is a part of a research project started in 2020. Both internationally and regionally, regulatory intervention and policy initiatives are promoting good corporate governance as the route to smooth executive succession. Amid exciting changes in the UAE’s legal landscape including the introduction of corporate tax, corporate governance is gaining steam. Building on our earlier feature in the MENA Business Law Review (Issue 03/2022), our review of local legislation and insights from comparative law suggest the Board of Directors as an effective solution for succession challenges.
- Optimize Board composition combining non-executive directors in proportion to the shareholding structure with a majority of independent directors
- Ensure a well-defined Nomination & Remuneration Committee
- Regulatory push to increase gender diversity on Boards in line with international policy drives (e.g. the newly implemented EU Women on Boards Directive)
- Education & awareness initiatives to push for independent Directors (e.g., clearly define independence requirements within the family charter)
This work was made possible with the support of fifty leading experts and practitioners in governance in the Middle East. Thank you Jane Valls CSK, Executive Director at the GCC Board Directors Institute (GCC BDI), Nasser Farah, Director at the Abu Dhabi Department of Economic Development, Walid S. Chiniara, advisor to prominent family businesses, former Head at Deloitte Private and author of the 7-Step Methodology™, Ashraf Gamal, CEO at Hawkamah Institute for Corporate Governance, Diana Hamade Attorneys at Law, Managing Partner at Diana Hamade Attorneys at Law, Ben Smith, Partner at Clyde & Co, Ghalya Rashid Ali, Senior Associate at Clyde & Co, Grace Seif, Legal Director and Attorney at Law, Richard Catling, Partner at Al Tamimi & Company, Dr. Arshi Ayub Mohamed Zaveri, Senior Advisor at Royal Family Offices, Mutaz Saleh, CIA, Partner at Deloitte – Risk Advisory, Haykel Hajjaji, Of Counsel at Covington & Burling LLP and Farida F. El Agamy, entrepreneur, lawyer and General Manager at Tharawat Family Business Forum, for lending their time and valuable insights.
A Solution to Executive Succession in UAE Family Businesses: The Board of Directors
By David Chekroun, Megha Bansal, Tanya Bansal
The MENA Business Law Review, LexisNexis, n°3, 2022, pp. 39-51.
Family-owned businesses (family businesses), which are uniquely important to the United Arab Emirates (UAE), face the challenge 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 executive succession planning, a responsibility of the Board of Directors (Board), is key to eliminating such conflicts and ensuring business continuity. This article assesses the rules and regulations regarding corporate governance in the UAE, including the composition of the Board and its role in succession planning, undertaken by the Nomination and Remuneration Committee (NRC). Finally, it sets forth a series of recommendations on empowering the Board to facilitate smooth transition of power amongst family businesses.