The Personal Status Law No. 5 of 2005 is the UAE’s Sharia-based law that covers marriage, divorce and succession. Article 1 says the law applies to non-Emiratis – unless they choose their home-country’s law.
The UAE mandates that Sharia be the primary legal basis for public order, but in matters of inheritance the Sharia courts had planned initially to follow the laws of the deceased’s home country.
However, inheritance, especially of real property, raises other difficulties in the UAE, too. How assets pass to heirs after the demise of a non-Muslim is covered by two contradictory regulations:
Article 17 (1) of the UAE civil transactions code says “inheritance shall be governed by the law of the deceased at the time of his death”. But Article 17 (5) says UAE law “shall apply to wills made by aliens disposing of their real property located in the state.”
After extensive debates, however, the Sharia courts decided that on succession, the Article 1 option to not use Sharia should not be available to non-Muslims. This is because in Islam inheritance is clearly structured in the Quran. Ordaining distribution of an estate in a manner contradictory to Sharia as incorporated in the Quran would not be appropriate.
In order to attempt to avoid the inheritance law to set up an offshore company in JAFZA will be one of the best solutions on this way. These can be used to own property, taking it outside the scope of the inheritance law.
Dubai has passed a law for incorporation of Offshore Companies in Jebel Ali freezone in the Emirate of Dubai. The laws have been framed in a manner such that authority maintains a clean image of the companies vis a vis international financial authorities.
The Jebel Ali Free Zone Authority (JAFZA), established in 1985, is the largest and best known of the Free Zones operating in Dubai, United Arab Emirates (UAE). In 2003, JAFZA was granted authority by the Emirate of Dubai to establish its own company law regime allowing the establishment of offshore entities. The Jebel Ali Free Zone Offshore Companies Regulations 2003 is the statutory framework which governs the incorporation and ongoing governance for JAFZA companies.
A JAFZA offshore company can conduct any lawful business except banking, insurance or reinsurance. The company can carry on business within the UAE, if appropriately licensed to do so. Currently only JAFZA offshore companies are allowed to own immovable property in Dubai.
Thus, to set up an offshore company or relocate your existing business, properties, assets overseas arecrucial steps toward security of your children/wife future.