Dubai Centre for Family Businesses launched

The Dubai Centre for Family Businesses was launched on Tuesday to attract more family-owned businesses from across the globe, as well as help local family businesses in terms of succession planning and guiding them to go public if required.

Family-owned businesses account for nearly 70 per cent of Dubai’s GDP, reflecting the importance of the sector. The emirate’s GDP stood at Dh307.5 billion in the first nine months of 2022.

Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, First Deputy Ruler of Dubai, Deputy Prime Minister and Minister of Finance of the UAE, attended the launch of the Centre at the Dubai Chambers head office on Tuesday.

“The Centre aims to provide a conducive environment to grow family businesses, ensure its continuity and raise their economic contribution to Dubai’s economy. The centre will offer many programmes to enhance governance in these companies and train their next generation of leaders. Our vision for family businesses is ambitious for they are our partners in the process of economic growth. Their role is vital, their contribution is essential, and their sustainability and continuity are a priority,” said Sheikh Maktoum.

Abdul Aziz Al Ghurair, chairman of Dubai Chambers, said the family-owned businesses have become multi-billion dollar conglomerates so they play a critical role in the local economy.

“The size is also big so it is becoming more critical to ensure that transition from founder to next generation is very smooth. So we plan to organise educational programmes to make all family businesses aware of legal infrastructure in the UAE to ensure they adopt the best structure available for a smooth succession transition,” he said.

Family dispute centre

Dubai Chamber chairman pointed out that as the number of family businesses has grown over the decades, so have the number of inter-family disputes.

“In coordination with the government of Dubai, we are in the process of setting up an independent family dispute centre so all family business disputes will go to that centre with experts sitting there to sort out the issues, so family business disputes will no longer go to courts,” he said.

“Some of the family businesses are held by one individual while their wife and children are future shareholders, so it is important to engage with the next generation. We don’t want to see the next generation suddenly own this business, so involvement of the new generation is critical so they can they are prepared to and ready to manage their father business.”

He said the decision to take the IPO route is the choice of the family business and one of the goals of the Centre is to have good corporate governance in family businesses and this will make it easier for them to go public. “There are certain requirements from legal and governance point of view. Because Dubai is home of not only local and international business, so we want to make sure all foreign businesses also have a legal structure in place.”

He pointed out that many small and medium-sized family businesses will be part of the Centre.

In terms of challenges faced by the family businesses for succession, he pointed out that the main challenge is to convince the founder that his wife, sons and daughters have different wishes and incorporate their wishes upfront.

He added that female members of the family businesses also need to be educated as they will be running the business someday and they will be asked to vote.

Al Ghurair added that no fee would be charged to the businesses.

The Centre also signed a memorandum of understanding (MoU) with the Dubai International Financial Centre to attract family-owned businesses from abroad and also help in setting regulations for them.

Mohammad Ali Rashed Lootah, President and CEO of Dubai Chambers, said the Centre will enhance the governance system, sustainability and continuity of family-owned businesses.

“Series of events and programmes will be organized for knowledge-sharing and about best practices by professionals. These events will cover laws of family businesses in the UAE, engage with the next generation and help in succession resolution. It will also organize programmes for leadership and training of the next generation.”

Lootah added that consultants will be made available for family businesses for best governance practices.

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