The UAE Cabinet, headed by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President, Prime Minister and Ruler of Dubai, has adopted a decision approving the issuance of a Federal Decree Law on Financial Covenants, which provides a legislative framework that will boost the performance of the wealth management sector and enable a competitive environment.
 
Family-owned companies will be among the top beneficiaries of this Decree-Law, as the founders and owners of these companies will be able to develop sustainable, long-term plans for the future of the companies' assets, said a Wam news agency report.
 
The law provides venture capitalists an integrated system enabling them to manage their own wealth as a financial trust by competent and qualified persons or institutions well versed with various investment patterns and their risks, and how to deal with them in the best possible way.
 
The Decree-Law falls within the government's continuous efforts to enhance the efficiency of financial legislation and policies in the country and provides a competitive environment in a way that contributes to protecting capital, drawing foreign investments, creating a safe, business-friendly environment, and diversifying tools to protect wealth and catalyse the investment environment.
 
The Decree-Law includes various types of covenant with specific purposes, such as a charitable trust that is created for charitable purposes, or a private trust that is created for the purposes of dealing in securities in various forms of transactions common in the financial markets, or for the purpose of establishing retirement funds or ensuring that benefits are provided to the beneficiaries in exchange for regular contributions payable to special custody.
 
The Decree-Law, from which financial free zones in case they have their own legislation are excluded, regulates the process of managing the custody in various aspects, starting with clarifying the legal nature of the custody, the means of its establishment and the conditions that must be met. The law also states what a "bond of custody" mean and how important it is, being the principal document that covers all the terms and conditions, including declaring the creator of the custody of his own will to establish the trust, determining its duration, the name by which it is known, its beneficiary, and the powers of the custodian.
 
The Decree-Law also permitted that the "bond of custody" includes other provisions for determining the beneficiary of the custody, the conditions for dealing in funds, the method for appointing, removing and replacing the custodian, the effects of the termination of the custody, in addition to the method for appointing the custodian, his powers, the executor and his powers, and how to increase the custody funds.
 
It represents a qualitative addition that will support the legislative structure of the financial and banking sector and enhance its competitiveness by adding new financial and investment products and tools that fulfill the requirements of the current situation and keep pace with global changes, especially in light of the growing need to apply innovative laws and legislative frameworks, the report said.

Copyright 2020 Al Hilal Publishing and Marketing Group Provided by SyndiGate Media Inc. (Syndigate.info).

Disclaimer: The content of this article is syndicated or provided to this website from an external third party provider. We are not responsible for, and do not control, such external websites, entities, applications or media publishers. The body of the text is provided on an “as is” and “as available” basis and has not been edited in any way. Neither we nor our affiliates guarantee the accuracy of or endorse the views or opinions expressed in this article. Read our full disclaimer policy here.