Dubai: Given their importance of family businesses to GCC economies, FBN officials said there is growing realisation at the government level on the need for creating specific laws to assist family business generational transition in this region.
Although some of the GCC countries such as the UAE and Bahrain have made progress in creating laws like the DIFC Trust Law to address the needs of family businesses in the region, FBN seeks to create legal frameworks across all GCC countries.
“We want to go a step further and create laws applicable onshore across the region that is available to family business of all sizes,” said said Abdul Aziz Al Ghurair, Chairman of the Family Business Network GCC.
FBN’s analysis indicates that roughly 80 per cent of GCC family businesses are in the critical transition stage of first to second or second to third generation.
In regard to succession planning, the Gulf has a unique dynamic at play. GCC family businesses are large families which presents them at an earlier stage in their evolution with complexities typical of families in their third and fourth generation cycles with large number of family shareholders. The likelihood of conflict and disputes increases with more family members who may have different views about the management of the family business.
In the GCC, succession planning must be done in the context of Sharia principles and inheritance laws that dictate a different approach to several issues including the separation of voting rights and ownership, and consolidation of the family members’ voting power.
