The Council of Ministers headed by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, approved a decision to approve the issuance of a Federal Decree-Law on Custody, which provides the appropriate legislative framework for the conduct of financial covenant business in the country, with the aim of organizing capital management By competent persons or institutions with experience in the field of investment.
The decree-law comes in support of the growing wealth management sector in the country, and in light of the need to find a legal tool that enables companies or persons who own various capital and financial rights, and wish to hand over these wealth and rights as a financial pledge in the custody of another person entrusted with the management and development of funds, due to lack of knowledge And the necessary experience in how to manage these funds, or not having enough time to manage them, or for any other reasons.
Family-owned companies will be among the most beneficiaries of this decree-law, as the founders and owners of these companies will be able to plan long-term for the future and continuity of the companies' assets, especially since the law provides for owners of capital an integrated system that enables them to manage their wealth as a financial trust by competent and qualified persons or institutions. Experienced and familiar with the different investment patterns and their risks, and how to deal with them in the best way.
The decree-law comes as part of the government's continuous efforts to raise the efficiency of financial legislation and policies in the country and provide a competitive environment in it, in a way that contributes to preserving capital and investing it in the country, and attracting foreign investments, leading to the provision of a safe and developed economic climate, and the diversification of the tools available to exploit and protect Business.
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 dealings 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, which excludes from the application of its provisions the financial free zones if they have their own legislation, 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 clarifies what a "bond of custody" is and how important it is as it is the basic document that includes all the terms and conditions, including declaring the creator of the custody of his will to establish the trust, determining its duration, the name by which it is known, the beneficiary of it, and the powers of the custodian.
The decree-law also permitted that the "bond of custody" include 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.
The decree-law constitutes 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 instruments that meet the requirements of the current situation and keep pace with global changes, especially in light of the urgent need to apply innovative laws and legislative frameworks.