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April 9, 2016
March 29 2016, Dubai UAE: Trench & Associates (T&A), established Dubai legal consultants, are advising companies to take note of recent developments in the inheritance process. The changes were implemented in February 2016 by the Personal Status Court of the Dubai Courts and could result in the freezing of company accounts.
This change in law relates to the demise of individual shareholders of companies or establishments located in Dubai. If the deceased is an individual partner or shareholder, then the company account will now be frozen until the Court makes further decisions in this regard.
This latest development is in addition to the usual Court order that if the deceased is the sole owner of the company, then the monies in the account will be transferred by the bank to the court’s treasury.
Ultimately this change in the inheritance process can affect the smooth operation of a company in which there are living partners continuing to operate the day-to-day business. What is more, this new stance taken by the Court applies to all companies, including those in free zones and to both Muslims and non-Muslims.
SMEs currently account for approximately 300,000 businesses and for approximately 90% of the workforce in the private sector in the UAE (Source: Khalifa Fund for Enterprise Development). Maintaining security for company assets is therefore critical to growth and survival.
Cynthia Trench, principal of Dubai legal consultancy Trench & Associates, who has been specialising in local laws for over two decades said:
“Dubai offers a great environment for the development of SMEs which have fast become the backbone of the economy. The recent changes in local stance taken by the Courts regarding inheritance mean that it is prudent for companies to structure shareholding properly, have multiple signatories for all bank accounts and have offshore holding companies. Safeguarding company assets is critical and companies and establishments are advised to either seek reliable legal support or to closely monitor legislative or regulatory changes.”
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