A dominant part of the Gulf’s economies is handled by large family groups, which face serious issues as they are being forced to move from the traditional informal family partnership to a more structured corporate world. Better governance and clear ownership structures are essential to handle both succession and forming joint ventures with foreign partners from major multinationals. Over the past decade, this has been frequently discussed and a variety of advice has been offered, such as that by the new GCC-wide Family Business Network. There have been some notable successes in corporatising some rambling family groups, as well as well-managed succession plans based on agreed valuations and dispersal plans, but there have also been some major failures leading to near-collapse of important companies.
Another useful recent development is for the governments of the region to look at creating the right legal structures that may allow such family groups to achieve good management and ownership continuity. These include Bahrain and the UAE. In UAE, the Dubai International Financial Centre has drafted its Trust Law specially for this situation. Such legal work is very important to underpin the long term prosperity of the commercial sector.
