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The Family Business Council-Gulf (FBCG), the regional association of Family Business Network International (FBN), collaborated with the Abu Dhabi Chamber of Commerce & Industry to organise a legal roundtable to discuss how family businesses in the UAE and the GCC can develop a strong succession plan that ensures a smooth handover from one generation to the other.
His Excellency Ebraheem M. M. Al Mahmood, First Vice Chairman, Abu Dhabi Chamber of Commerce & Industry, said in his opening speech at the event: “Family businesses play a crucial role in the country’s economy by creating a generation of distinctive entrepreneurs. The current market conditions coupled with the available workforce provide these young entrepreneurs with rich experiences and skills that enable them to run and manage their businesses. Statistics show that family businesses in the Gulf region represent a percentage that range between 65-80% of the private sector.
“The Abu Dhabi Chamber of Commerce & Industry is keen to provide full support to the owners of family businesses to achieve their goals and improve the profitability of their businesses. The objective is to help them overcome any hurdles they face. We invite family business owners to explore opportunities in specific sectors that are in line with the Abu Dhabi Economic Vision 2030 and contribute to strengthening economic relations by entering into mutual agreement with us.”
Most family owned businesses in the UAE and the GCC will face a succession challenge within the next decade. The handover from the first to the second generation, and increasingly, the second to third generation will have tremendous implications on the continuity and growth of companies. Very few family businesses – 15 per cent according to international trends – survive to the third generation.
FBCG stressed that family business succession is arguably one of the most critical issues a family business has to face; it is also one of the most difficult aspects to plan for.
Commenting on the role of FBCG in supporting family businesses through the continuity challenge, Chairman of FBCG, His Excellency Abdulaziz Al Ghurair, said: “We encourage and support family businesses to be well prepared to face the challenges of succession planning by strengthening three key areas – first by building a rigorous legislative framework; second, by developing governance frameworks for family members and lastly, qualifying the next generation of family businesses to bear their responsibility as owners and directors of their businesses.”
His Excellency Al Ghurair stressed that the legal planning component is a crucial building block for an adequate preservation plan. “At the Family Business Council we understand that without a well-planned and resilient legal structure for a family business, the pursuit of continuity can be futile.”
He added: “It is critical that family businesses take adequate time to incorporate the legal structure that best fits the family business and agree on terms which shield it from the risk of fragmentation.”
The legal roundtable program provided practical steps on developing adequate legal frameworks to safeguard the business while considering each family business’ unique requirements and goals. The event’s sessions introduced and discussed the dynamics of legal frameworks commonly used for succession planning such as LLC formation, setting up of trusts, planning for IPO or establishing Closed Joint Stock companies.
The event program also covered the topic of family governance, reviewed two family business case studies to showcase and guide how governance systems can be structured to better suit families’ unique requirements.
The legal roundtable was a successful collaboration between FBCG and Abu Dhabi Chamber. The event was attended by more than 30 leading families from Abu Dhabi along with other families who are FBCG members from the UAE and other GCC countries. The roundtable discussed a great deal of information on legal and governance issues and successfully triggered effective exchange of knowledge between the family businesses on solutions to address the challenges of succession planning.
His Excellency Al Ghurair concluded: “We are happy with our collaboration with Abu Dhabi Chamber, and their support in involving a great number of leading family businesses in effective conversations and learnings, thus serving the pursuit of continuity by family businesses across generations.”
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