3 Risks Business Owners & their Families are exposed to in the UAE

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3 Risks Business Owners & their Families are exposed to in the UAE


Entrepreneurs, start businesses for one or all of the following reasons.

  1. They want to be their own boss, and promote this fantastic product or service that they have thought of.
  2. They want to give the best lifestyle to their family.
  3. They want their business to be a source of income for their retirement years.

There is not much more is there? But setting up a business and making it successful is easier said than done. In today's world, setting up a business requires a lot of capital. Sometimes additional capital is required to take on high-value projects and/or expand the company to hire more people, or to buy equipment, or even to get a better office etc... Mostly entrepreneurs end up funding this themselves from their earnings and lifetime savings.

Doing so exposes them and their family to different types of risks. In fact the risks are compounded for business owners in the U.A.E, due to the lack of knowledge about the inheritance laws here.

1. Legal Risks

  1. Firstly, in the absence of a registered will, all the personal and business assets of an expat are subject to distribution as per the law of the land (Shari'ah Law) regardless of nationality and religion.
  2. If the guardianship of the children of the deceased is not specified in the will, it is not automatically granted to the mother. The father-in-law gets automatic guardianship of the children. If the government is not able to contact the father's side of the family, the children could end up in government care, not with the mother.
  3. Shari'ah law places a high importance on the settlement of any liabilities of a person. This includes personal and business liabilities.
  4. So when an expat passes away, his dependent's visas are cancelled and they have 30 days to leave the country.
  5. Then his personal and business bank accounts may be frozen (within one hour in come cases) till such time as all the liabilities are cleared.
  6. Once liabilities are cleared, if a will has been registered, it will be duly executed as per the wishes of the deceased.
  7. In the absence of a registered will, the estate of the deceased is distributed according as per Shari'ah law.
  8. Just one example of distribution as per Shari'ah law is shown here - If the deceased is survived by a mother, father, wife and three children (one son and two daughters)
    1. The wife shall receive 1/8th 
    2. The mother and father shall get 1/6th each
    3. After these three parties have received their respective share, the remaining wealth will be distributed among the son and daughters, with son getting the share of two daughters (i.e. a male child gets double of a female child).

This has huge implications for a business owner because his/her family may be left with no access to their bank accounts, credit and ATM cards when the father dies, sometimes for as long as 18 months till the courts decide on how to distribute the assets.

2. Wealth Risks

Entrepreneurs invest everything in their business because they are convinced that their business is the best investment in terms of returns. Moreover some business owners don't even take home a salary and reinvest most of the business profits back in the business. I know people who have sold their homes to fund their business. Since all of the entrepreneur's wealth is invested in the business, it becomes the sole source of income and a single point of failure.

If the business fails, or if the entrepreneur dies without proper income protection, his/her family could be left without any source of income. The bigger problem is when the owner falls sick. Mostly, the entire business depends on him/her and the income could stop when work stops, while expenses and business costs may continue unabated.

3. Business Risks

The key questions to ask for a business owner in relation to business risks are below:

  1. If a business owner dies, how will the family get the money that was invested in the business?
  2. If a partner dies, what happens to the partner's invested capital?
  3. In the absence of the owner, how will the business get adequate working capital to continue operations?
  4. How will the suppliers be paid the amounts due to them?
  5. What happens to the outstanding debt in the market due from customers?
  6. How will the bank financing be paid back without losing pledged assets?
  7. If the star sales person, or the person responsible for the entire operations dies, what loss will be incurred by the company and how will it be protected?
  8. If employees leave when the owner dies, how will their gratuities be paid as per labour law?
  9. How are personal and business assets pledged to the bank as collateral protected against forfeiture if the owner dies?


All business owners and their families are exposed to various forms of risks. The key is to identify these risks and address them according to the gravity of the risk and its priority. What risks is your business and family exposed to? And how can you address them? To find out more, and to schedule a free initial assessment, click on the 'Ask Amit' button below.

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About the author

Amit is an Independent Financial Advisor, based in Dubai since 1997. He is part of the prestigious ‘Million Dollar Round Table’ (MDRT), which is an elite club of the best financial advisors worldwide.

He has authored the ‘6-Step Financial Success Guide’, and the book ‘Creating, Preserving, Distributing Wealth’.

He helps business owners and professionals ‘Create A Second Income’ through investments.

Amit Mitbawkar

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