In a workshop held at Asharqia Chamber, 6 positive aspects for implementing governance in SMEs.
Alsaihati: Family business owners should begin to review their administrative and financial policies within their companies according to the governance procedures.
On Wednesday 11 April 2018, Asharqia Chamber in cooperation with Tarkiz Management & Financial Consulting- one of the experience houses in the region-organized a workshop on the governance of small and medium-sized family businesses and their legal forms.
During the workshop and in the presence of board member, Badr bin Mohammed Al Abdul Karim, Najeeb Abdullah Al-Sihati (a member of the Board of Directors of Asharqia Chamber) confirmed that the best solution for the sustainability and growth of family business across generations is the introduction of governance as it achieves the required balance between management and ownership, and takes companies to progress and prosperity regardless of size or the number of its employees. He pointed out that with the new fundamental changes witnessed by the national economy in the laws and regulations, there is a need for the family business owners to start reviewing their administrative and financial policies within their companies in accordance with the rules and procedures of governance.
Al-Sihati said that Asharqia Chamber is holding this workshop in cooperation with Tarkiz Management & Financial Consulting, because it recognizes the great position that family businesses occupy in the national economy, as well as the importance of educating family business owners in the best way possible in achieving a safe governance that preserves their wealth, their work, and the cohesion of their families in the long term.
Dr. Omar bin Nabil Al-Sunaid, a Legal Advisor, explained the governance and its concept and the advantages and disadvantages of its implementation. He pointed out that there are 6 positives to the application of corporate governance, as follows: enhancing performance and providing a clear environment for work; creating visible administrative structures that can be accounted for; its support for transparency and accuracy in the financial statements; as well as it limits the administrative and financial problems; and it is a key factor in attracting domestic and foreign investments. At the same time, however, he pointed out the possibility of the loss of governance for its effectiveness, despite its application, especially with the continuous updating of its standards. He stressed the need for companies to adhere to the framework of appropriate governance and of continuous work on modernization and development in order to avoid any negative results.
Al-Sunaid said that the vast majority of registered enterprises in the Kingdom are small and medium enterprises, which in turn represent a huge sector that contributes a high percentage of the inputs of other establishments. Therefore, the adoption of these institutions would provide sufficient assurance to operate all operations of the establishment according to specific controls that improve administrative decision-making mechanisms. In fact, this would reflect positively on the utilization of resources and the preservation of capital, in addition to strengthening professionalism and accuracy in accounting and auditing practices and providing them with more professional standards and systems in the recruitment of human resources.
Al-Sunaid stressed that the most appropriate legal entities for governance is the joint stock company, especially in terms of preserving long and clear vision in the procedures of transfer of ownership and exiting, as well as the effective regulatory framework. He pointed to the importance of adopting the foundations of family governance in terms of clarifying the vision, values, and objectives. Thus, its entirety constitutes an effective reference to guide the strategy of leadership, the distribution of powers, and administrative functions among family members.
He pointed out that the drawing of effective ways and laws in accordance with the governance system comes with joint decisions among family members. This would govern the relations between the owners of the company and family wealth, regulates the transfer of quotas and exit from the company, in addition to its role in maintaining the stability required to focus more on the performance of the company and promote growth. He encouraged families to recognize early sensitive family issues and solve them.
At the end of the workshop, the board member of Asharqia Chamber, Najib Al-Saihati, honored the Legal Advisor, Dr. Omar bin Nabil Al-Sunaid, with a commemorative shield.
