Riadske newspaper | National Center for Family Businesses for “Riyadh”: Implementation of the “Family Charter” in the new family business system, beginning of January 2023.

Capital Markets Authority: 63% of listed companies have increased their profits compared to what they were before listing

National Center for Family Businesses for “Riyadh”: Implementation of the “Family Charter” in the new family business system, beginning of January 2023.

revealed Dr. Ghassan Al-Sulaiman, Chairman of the Board of Directors of the National Center for Family Businesses, in an interview with “Al-Riyadh”, about the entry into force of the “family charter” clause in the new family business system at the beginning of January 2023, and said that there is management and there is a family scope, and the problem is not in the management of family companies. Before the new system is issued, every company has an obligation to the new corporate system, and there are provisions that must be followed, “regulatory compliance”, which is part of management, and the other part that companies put in “items” and impose on themselves in the field management, “family charter”. option for companies, and the problem was non-observance of the provisions of the “Family Charter” by generations, and this system was missing in the past, but with the new system for family companies, if this charter is documented in the Memorandum of Association, it has become binding for all generations.

Regarding the role of the center at the Directorate for the listing of family companies in encouraging and calling for the listing of family companies, he confirmed that four years ago, in cooperation with the Capital Market Directorate, steps were taken to encourage the listing of family companies, indicating that listing is one of the solutions. and not a magical solution for the sustainability of family businesses, pointing out that the center is working to raise awareness in this area with family businesses and by the Capital Markets Authority regarding the listing process, not just sustainability gains, because there are other gains, as described it.

Regarding the number of companies that have applied for listing, he said a good percentage and he hopes that the percentage of listing on the financial market will increase, indicating that the process of transforming family businesses into other entities could be a healthy form financed by the parent. society.

Although a number of speakers confirmed today (Wednesday) in the session (National Experiences for the Institutionalization and Management of Family Businesses) in which Abdullah Almajdouie, Badr Al-Sayer, Ibrahim Al-Mubarak and Ferial Nass from the Kingdom of Bahrain participated, as part of the National Sustainability Forum of family businesses, which is held in the Asharqia Chamber in cooperation with the National Bank Center for Family Businesses, that the most prominent causes of problems in family businesses are not financial, but psychological and social, emphasizing that there is legislative and organizational development in the family charter, especially because these companies represent 63% of the number of business units in the private sector and contribute 66% of private sector GDP. About 76% of employment is in the private sector.

Where Abdullah Almajdouie emphasized that the concept of sustainability is not at all of good significance, indicating the presence of “healthy” and commendable sustainability for family businesses, while there is “satisfactory” sustainability for family businesses, indicating the existence of competition and rivalry between partners, which requires seeking other ways to maintain family and blood ties, while calling for a focus on “healthy” sustainability that contributes to the continuity and growth of family businesses, emphasizing that “satisfactory” sustainability is destructive for family businesses and their survival is unhealthy.

He said that family disputes are the most prominent feature of “satisfactory” sustainability, noting that the nexus of blood and money is difficult to control, which requires the existence of wise management to manage things properly, by setting controls and the ability to organize issues, stressing that sustainability has great importance in terms of the continuation of family business, especially because 30% of family businesses in the world can continue to the third generation, emphasizing the need to preserve family business through a clear system through fraternal relations and family bonding, while warning against going to family businesses due to the lack of good opportunities for family survival, and warned is also to increase systems and management in family businesses in exchange for moving. away from the spirit of the founder and the self-sufficiency of the founder, referring to the link between management and maintaining the self-sufficiency of the founder, without setting strict management and not abandoning the spirit of the founder who contributed to the establishment of the entity.

Ibrahim Al-Mubarak explained that the participation of the private sector represents 43% of GDP, while the target is 65% by 2030, which indicates that family businesses represent the majority of the private sector, calling for the need to upgrade family businesses to participate in the national economy, emphasizing that the new family business system focuses on the family charter and other requirements, emphasizing the importance of the sustainability of family businesses, especially since family businesses in the Kingdom have entered the second and third generations.

He said that the gradation in family companies is a necessary process, through the conversion from a trading company to a joint stock company as well as to closed shareholding, indicating that the conversion of family companies to closed shareholding contributes to solving many problems, because the inclusion of family companies requires the presence of good departments in order to maintain shareholder funds, which indicates that the separation of existing companies from holding companies gives holding companies the opportunity to enter different areas, which means that the roles of holding companies are different from existing companies that operate in certain sectors and have special strategies.

Badr Al-Sayer noted that the source of disputes in family businesses is more represented in social and psychological factors than in financial aspects, excluding that disputes in family businesses are related to money, indicating that there are many disputes in family businesses whose financial returns are very large , emphasizing the need to establish a strict system in family businesses to overcome future disputes, by defining the responsibilities of each person from the beginning, emphasizing that the death of the founder sets off the first spark for disputes in family businesses, calling for the development of a family constitution that includes all rights and requirements for everyone in family businesses , emphasizing the importance of The Family Pact was drawn up during the time of the founders to eliminate future quarrels.

Founder and Chairman of the Bahrain Entrepreneurship Board, Ferial Nass, said that entrepreneurship originates from the founders of family businesses, noting that future generations acquired entrepreneurship from the founders of family businesses, digging the stones to achieve great achievements and build. large companies, pointing out that entrepreneurship is the transformation of ideas into existing and successful projects, the challenge of all the problems faced by the process of building a company, pointing out that some of the founders of family companies turned family companies into joint-stock companies in order to avoid getting into problems between the heirs in the first place of the future and second achieving sustainability, while overcoming the problems of the third generation.

She referred to the role of entrepreneurs with OPGs represented in the adoption of young entrepreneurs by defining healthy paths, emphasizing the importance of investing in OPGs in idea carriers, adding that “angel investment” is represented in the development of family business lines and the presentation of new ideas related to technology and sustainable energy, which contributes to the realization of innovations in family businesses, warning at the same time about the stagnation of the same activity in family businesses, given that entrepreneurship is a challenge and continuity and an integral part of family business.

On the other hand, Bader Al-Ghunaim, Undersecretary of the Capital Market Authority for Legal Affairs and Enforcement, indicated that the offer of new companies in the financial market came to improve their survival and financial sustainability. Transparency and management also lead to more effective preservation of shareholder rights, in addition to the possibility of easy exit, unlike other companies, noting that the cost of financing is much lower in listed companies than others.

He said that a study conducted by the Agency showed that 63% of companies listed on the financial market increased their profitability compared to what they were before listing, which indicates that there is no difference between family companies and others listed. , because it allows them to issue different types of shares, which indicates the existence of a partnership between the Capital Markets Authority and the Ministry of Trade to support and list new companies, especially simplified joint stock companies.

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