The United Arab Emirates recently enacted Federal Decree-Law No. 31/2023 (the “New Law”), which supersedes the previously issued Federal Law No. 19/2020 Regarding Trusts (the “Old Law”).
The New Law, published in the official gazette on September 25, 2023, is a significant development in trust law in a civil context, which establishes a newly developed regulatory framework surrounding the administration of trusts within the Emirate. Fundamental amendments to various existing provisions of the Old Law have been integrated into the New Law, which primarily seeks to enhance transparency and accommodate for a superior standard of practical implementation of the law.
Moreover, the New Law grants recognition to trusts in all Emirates (excluding financial free zones), notwithstanding the location of the trust’s assets, whereas the Old Law recognizes trust arrangements solely within an onshore UAE legislative system. Further to this, a separate system for the registration of trusts has been newly implemented, including the issuing of a validity certificate and an incorporation certificate by the adequate authority. Ultimately, the New Law introduced supplemental features in relation to the duties and liabilities assigned to a settlor, trust protector, and trustee.
In conclusion, the issuance of the New Law has underlined the UAE government’s commitment to integrating sophisticated financial practices to manage and preserve businesses and the region’s overall wealth by implementing forward-looking initiatives.
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Author: Sridevi Sidharthan & Ludovica Ticali (Intern)
