Cancelation of Family Ownership Agreement in UAE

Family ownership agreements are part of the management and succession of family businesses in the UAE. However, at times, its cancellation may be necessary. The knowledge of the legal regime and following the procedure for the canceling of a family ownership agreement is important in ensuring smooth transition and protection of rights of each parties involved. This article sheds light on the major aspects surrounding the issue of cancellation of family ownership agreements in the UAE.

Understanding Family Ownership Agreements

According to Dubai Law No. 9 of 2020, family ownership agreements are a form of ownership where families can jointly own and administer a wide variety of assets, including real estate, businesses, and other types of highly valuable assets. These contracts relate to the formation of legal provisions on family ownership, principles of profit-sharing, management, and mechanisms for dispute resolution.

Grounds for Cancellation

Several factors may require a family ownership agreement to be canceled:

• Disagreements among Family Members: If there is some sort of persistent disagreement or conflict, then it would be very hard to run the business proficiently.
• Business Strategy Change: Any change in the business model or strategy will be grounds for a new agreement.
• Issues on Inheritance and Succession: Any change in family structure due to inheritance or succession planning may require that the existing agreement be revoked.
• Challenges in Finance: In particular, financial crises may lead to an overview of ownership structure.
• External Factors: Legal, regulatory, or market developments could alter the agreement’s validity.

Cancellation Process

The steps involved in dissolving a family ownership agreement depend on the cause of termination and the wordings of the contract. The general steps associated with such processes are as follows:

1. Reviewing the Agreement: The first step is to go through the agreement once again and understand clearly the clauses of termination and any other special procedures.
2. Consulting Family Members: There should be open communication among all parties. This would mean that the couple or individuals need to discuss and find grounds for cancellation.
3. Consult a Lawyer: One should seek advice from a family and property lawyer as such a lawyer will help take them through the legal lines, highlighting any potential problems that might emerge and ensuring one’s rights are duly safeguarded.
4. Formal Notice (if necessary): Termination may be subject to issuing formal written notice, based on whatever conditions are laid down.
5. Negotiation and Settlement: Negotiate with the other party and settle, in case of mutual cancellation, pertaining to the division of assets and other outstanding issues.
6. Court Proceedings (if necessary): In case a mutually agreeable solution is not possible, then the courts may have to intervene. Your attorney will guide you through the litigation.
7. Cancellation Registration: When the cancellation has been agreed upon, it should be registered with the relevant authorities. More specifically, in the case of property assets, with the Land Department.

Role of Drafting Lawyers in the Process

Drafting lawyers play a very important role in the cancellation of family ownership agreements. Their expertise ensures that this process will be carried out both legally and effectively. Principal services that drafting lawyers extend to these requirements are basically:

1. Legal Consultation: Advising on the legal implications with regard to the cancellation of the agreement.
2. Drafting Termination Agreements: Making comprehensive and legally binding termination agreements.
3. Notarization and Registration: Progressing notarization and registration to prove it within the bounds of the law.
4. Dispute Resolution: Mediating disputes and providing answers to various issues to solve disputes among family members.
5. Tax and Financial Advice: Giving advice on tax as well as financial implications of the cancellation.

How Drafting Lawyers at Notary Public Dubai Can Assist

Termination of a family ownership agreement is a difficult procedure, both in financial and legal terms. At a Notary Public Dubai, you can get the help of a lawyer in drafting the agreement at each and every step of the way. The drafting lawyer helps with the following: 

• Agreement Review: The lawyers will go through your agreement to understand the clauses of termination and any procedures established.
• Legal Advice: We will give our expert advice on what the course of action should actually be in your case.
• Communication Facilitation: Our team can facilitate communication between the family members to come up with an amicable solution.
• Drafting legally binding documents: When required, we can help in drafting legally sound documents for termination notices or agreements.
• Representing you in court (if required): If there is litigation, our well-experienced lawyers are ready to represent you before the court proceedings.

In case one decides to cancel an agreement for family ownership, well-experienced drafting lawyers at Notary Public Dubai are ready to offer all legal advice and assistance. Reach out to us today to guide you through the process seamlessly and in accordance with the law.