They demanded a federal law to support its continuation and development

Investors: The departure of the founder of the company and the difference in the plans of the heirs ... the main challenges of the "family business"

picture

Businessmen reported that the transformation of family businesses into joint stock companies enhances their survival and development, in addition to improving performance and management effectiveness should be part of the family business' method of work to ensure its survival.

They indicated to Emirates Today that a small number of family businesses can continue after the departure of the founder of the company, in the event that the companies are left without a system that controls them, such as family credit or the transfer of companies to a public joint stock company, as family businesses often disintegrate with the first or second generation, Because of the different plans and desires of the heirs, and less than 30% of family businesses in the world continue after the second generation, which illustrates the challenges they face.

They emphasized that there is a need to develop legislation and laws that protect these companies at the state level, through a federal law that supports their continuity over the years, which will support and develop the national economy, noting that the law regulating family ownership in the Emirate of Dubai has established a comprehensive legal framework It is clear to regulate family ownership in the emirate in a way that preserves the continuity of family ownership, and enhances the role it plays in achieving economic and social growth.

A special philosophy

In detail, the Chairman of the Board of Directors of Essa Al Ghurair Investment Group, a member of the Board of Directors of the Dubai Chamber of Commerce and Industry, Issa Al Ghurair, said that “it is better for family companies to have a vision and philosophy of their own, which will ensure their continuity,” adding that “development, improvement of performance and effectiveness of management must be Part of the family business method, in a way that ensures its survival for years. ”He affirmed that“ the law regulating family ownership in the Emirate of Dubai has established a comprehensive and clear legal framework to regulate family ownership in the emirate, in a manner that preserves the continuity of family ownership and enhances the role it plays in achieving growth Economic and social ».

Al-Ghurair added that “the continuity of the companies depends on the choices of the owners, as the law clarifies how to exit the partners, which gives companies sufficient flexibility to continue or convert the company into a public shareholding”, pointing out that “this flexibility is by agreement between the partners, and the survival of the family business depends on their ability. On developing themselves and their steadfastness in facing challenges, especially as family companies were the most resilient in the face of the emerging Corona pandemic (Covid-19), because they have a long-term outlook.

Al-Ghurair praised the law regulating family ownership in Dubai, saying that "the government looks forward, especially when it provides solutions to help face the current situation," noting that it gives companies the choice to remain in their current position, or to pursue new solutions.

contribution companies

For his part, the Chairman of the Board of Directors of Al-Ansari Exchange Company, Muhammad Al-Ansari, said that «the law strengthens the efforts of family companies, according to each company and the sector in which it operates», stressing that «converting family businesses into public joint stock companies is not considered a green card for their growth, development and continuity. But it helps in that significantly ».

Al-Ansari added: “Organized family businesses can continue to exist, even after the retirement or absence of the founder of the company, and there are successful models that prove this,” indicating that the companies that do not continue, often, are professional family companies that depend on the profession of their founder, when his children do not want to Continuing their father's profession itself, explaining that even if the field is successful, the company does not continue because the children are not interested in its specialized activity.

He believed that on the other hand, there are successful family companies that could not withstand when they turned into a joint stock company, and this means that effective family management may support the continuation, growth and development of the company, better than institutional management, especially with the reservations of some families in converting the activity into a joint stock company. This restricts freedom of decisions and imposes unnecessary control over family businesses.

He said that "recent years have witnessed great gains for family companies, which were able to work until they succeeded in overcoming the challenges of the (Corona) crisis in a better way than joint-stock companies, as the latter suffered from financial crises," adding that the experience of businessmen has a good effect in managing these companies, Especially with the remarkable government support for the private sector in the UAE, and the recent law on the regulation of family businesses in Dubai, helps to organize family businesses and strengthens the guarantee of their continuity for the future.

Company founder

For his part, the founder and chairman of the Al Habtoor Group, Khalaf Ahmad Al Habtoor, said, “A small number of family businesses can continue after the departure of the founder of the company, in the event that the companies are left without a system governed by the family trust, or the companies are converted into a public joint stock company. "Family businesses often disintegrate with the first or second generation, due to the different plans and desires of the heirs."

Al Habtoor added: “If a system for corporate governance has been established, such as the family trust system, and under the new wealth management law, which was recently approved by the UAE Cabinet headed by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister and Ruler of Dubai, As this law defines a legislative framework for businesses that move to the second or third generation, and most of the time face the risk of collapse.

"But the condition is that a financial covenant is signed that grants guardianship authority to trusted persons or institutions in order to manage growth and invest money."

He continued, "This is required of all founding owners to plan for the future of their assets, and to preserve their assets in the long term," adding that "it is necessary for the founders of companies to plan for their future after their departure. Otherwise, very few companies will continue as an institution or a unified group after the first or second generation." ».

Al Habtoor said: “For these companies to remain established and grow, the only and appropriate solution is to transform into public joint stock companies.

But the difficulty lies in persuading the partners to convert them into joint stock companies ».

Great reputation

In turn, Otaiba Saeed Al-Otaiba, Chairman of the Board of Directors of the Al-Otaiba Projects Group, said, “Family businesses in the Emirates are strong and have a great reputation for years, and they are still maintaining them, and maintaining their growth is a very important issue because the growth of these companies directly contributes to the growth of the economy. As a whole".

Al-Otaiba explained that "many large family companies have a large presence and branches abroad, and new generations have invested in them, and the founders have also invested in them, what support these companies and raise their ability to compete locally and internationally."

At the same time, he stressed, “Family companies need a lot of organization and governance in their management, and some of these companies face a great challenge, which is to continue managing them with high efficiency after the death of their founder, as disputes occur between the heirs sometimes, which severely affect them. The future of these companies », pointing out that global statistics indicate that less than 30% of family businesses in the world continue after the second generation, which illustrates the challenges they face.

Al-Otaiba pointed out that the outbreak of disputes in some family companies, after the departure of their founder, leads to faltering and the impossibility of continuity of these companies, especially since some disputes have been escalated to the judiciary and are considered by the courts for periods of up to 30 years.

Al-Otaiba called for a binding federal law to regulate the affairs of family business management, especially in light of the succession of generations to these companies to support their continuity and success for many years.

Finally, he noted that the law, promulgated by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, on the regulation of family ownership in the Emirate of Dubai, is, finally, very important, as it is a big step on the right path, and plays a major role in protecting Family companies and preserving the funds and continuity of these companies, to be a quantum leap in the future of these companies during the coming period.

Strong companies

In the same context, Sheikh Ahmed bin Muslim bin Ham Al Ameri, General Manager of Bin Ham Group, said, “Family companies in the Emirates are strong and well-established companies that have been able to overcome many of the crises and challenges they have faced over the past years,” considering that family businesses are among the Most of the institutions that quickly adapted to the new situations, after the "Covid-19" pandemic, were able to overcome many of the challenges they faced, and deal flexibly with the sudden changes caused by the pandemic.

He stressed that many family companies in the country continued to invest internally and externally during the Corona pandemic, and did not dispense with their employees, despite the difficult global conditions, which confirms the strength of these companies.

He noted that family businesses are one of the most important pillars of the UAE economy, and therefore any factors affecting these companies have a direct impact on the economy, which requires support and preservation of their cohesion and continuity, especially in times of crisis.

Bin Ham considered that the law regulating family ownership in the Emirate of Dubai is very important, and supports the continuity of family companies, as well as the competitiveness of these companies and their role in the national economy, indicating that the need to develop legislation and laws that protect these companies at the state level and support their continuity over the years. It is intended to support and develop the national economy.

Family businesses are a qualitative addition to the national economy

The economist and director general of the Al-Masar Foundation for Economic Studies, Najeeb Al-Shamsi, said that “family businesses are an important qualitative addition to the national economy and to companies in the state, in addition to public, private and limited liability companies.” He pointed out that family businesses originated in certain circumstances in the world. And it is present so far in many major countries, led by the United States of America and Europe.

Al Shamsi called for issuing a federal law for family companies in the UAE, subjecting them to supervision and applying basic legal standards to them, in order to ensure their continuity, protection, and the absence of violations by them, and to avoid any disputes occurring between their owners, indicating that these companies are not isolated from the economic system, and any shake-up that is exposed. It affects other economic sectors, especially the banking sector.

He said that there is importance to take some decisions, especially in cases of family business default, such as converting these companies into public joint-stock companies and offering part of their shares for public ownership, with the possibility of a merger between family companies and public shareholding companies, as a safety valve for these companies and protecting them from default. And expand the ownership base, indicating that the purchase of the company's products by the shareholders supports its economy and existence.

Al Habtoor Group

The Al Habtoor Group was launched as a small engineering company in 1970 and has become today one of the largest and most prominent companies in the region, with diversified businesses in key economic sectors: (hotels, cars, car rental, real estate, education and publishing). The group's hospitality portfolio includes 14 hotels. Distributed between the UAE and international markets.

The law regulating family ownership in Dubai supports the protection of family businesses and the preservation of their funds

Follow our latest local and sports news, and the latest political and economic developments via Google news