UAE Trends and Developments Contributed by: Yann Mrazek, Kath Zagatti, Hermione Harrison and Ksenia Shvalova, M/HQ Corporate Services Ltd
three considerations within a coherent legal frame- work. Among these considerations, the risk of ownership fragmentation – particularly in cross-border and man- datory heirship contexts – is often the most immedi- ate and legally complex. It is at this intersection of control, asset integrity and legitimacy that structuring becomes critical. Fragmentation risk and mandatory heirship considerations In the absence of lifetime structuring, ownership inter- ests pass in accordance with the applicable succes- sion laws. For Muslim families, Sharia-based forced heirship principles apply as part of the governing personal status framework, unless effective lifetime planning has been implemented. Shares held in personal name typically form part of the estate and are distributed among statutory heirs in prescribed proportions. This may result in fractionalised shareholdings across mul- tiple branches of a family. Even where testamentary freedom applies, cross- border families must address conflict-of-law consid- erations. The governing law of the estate, the situs of assets and the personal law of the deceased may produce competing claims. Multi-jurisdictional pro- bate processes can delay operational continuity and introduce uncertainty at the level of the underlying company. For closely held businesses, fragmentation may result in: • dilution of voting control; • misalignment between economic ownership and management authority; • shareholder deadlock, particularly where deci- sion thresholds require unanimity or supermajority consent; • disruption of financing arrangements triggered by change-of-control provisions; and • increased exposure to minority shareholder claims.
These risks are amplified where shareholder agree- ments were drafted on the assumption of a single con- trolling shareholder. As a result, founders increasingly consolidate shares during their lifetime into holding structures or transfer them into trusts or foundations. While holding companies facilitate governance con- solidation and voting control mechanisms, trusts and foundations, when properly constituted, may remove assets from the founder’s personal estate for succes- sion purposes, limiting exposure to forced heirship distribution and reducing fragmentation risk upon suc- cession. The planning objective is not to exclude heirs from economic participation, but to preserve business stability while structuring ownership and control in a manner consistent with long-term continuity. Governance architecture Beyond mitigating fragmentation risk, contemporary succession planning increasingly focuses on institu- tionalising governance itself rather than relying solely on succession triggered at death. A notable development in modern succession plan- ning is the move away from reliance on testamentary documents alone. While wills determine how assets are distributed, they do not regulate how businesses are governed, how authority is exercised or how lead- ership transitions are managed in practice. Contemporary structuring instead emphasises institu- tional design, ensuring that authority, decision-mak- ing processes and succession of office are regulated during the founder’s lifetime rather than left to estate administration. This may include holding company consolidation, foundation-based ownership, differ- entiated voting rights, shareholder agreements incor- porating continuity provisions and formalised lead- ership transition protocols. Family constitutions and letters of wishes frequently operate alongside bind- ing constitutional documents to articulate values and expectations without displacing formal governance frameworks. Such mechanisms allow economic entitlement to be separated from voting control. For example, a founda- tion may hold shares in an operating company while
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