12/09/2013
The forum' turning the family business into contribution 'launched
Organized by the Chamber in cooperation with Tadawel
Al Sheikh: we facilitate family business shifted to contribution and we look forward to overcome the challenges facing family businesses in transition
Alrabiah: 4% from family business up to the fourth generation, switching to the contribution is leading solution
His Excellency Mohammed Abdulmalik al-SheikhPresident of CMA stressed on the importance of turning the family business to contribution and inclusion in the financial market, saying that this will lead to many benefits for the company themselves through their use of the applicable legislation and regulations in the financial market after the Insert, and others for the financial market, increase their chances of attracting companies have long experience in business and is expected to be of interest to investors in the market. This as well as reflected in the transformation of the family business to the benefits of the national economy in General by increasing the efficiency of the national economy and support the local product.
Al Sheikh said in his speech during the Forum 'family business turned intocontribution'at the East Chamber with cooperationwith the Saudi stock exchange (Tadawul) Wednesday 11/11/2013. The family business, one of the pillars of the world economy and in particular, this type of companies play a key role in the local economy, contribute a share of GDP, this underscores the importance of family firms and the need for continuity and stability, expand its activities, but at the same time face serious challenges increased with the Second and third generation of owners of the company reins when it starts the disparities in the powers and responsibilities and views, which may lead to an unhealthy environment may affect the continuation of the especially if they doesn't take any steps or measures that would reduce those risks. We have in Saudi Arabia examples of companies dissolved and lost the ability to continue because of that, this is extremely important and influential role in the national economy.
He added that the working basis for the continuation of any company is well-management, continues its activity and growth, and there is no doubt that turning a family business into a publicly traded and listed on the stock market, will address the fears that haunt the family business owners when their companies reached subsequent generations, it is in the interest of companies, and of continuing to abide by the rules of corporate governance, and there's action family company can take to apply these rules and reduce any overlap between the powers and responsibilities of owners and management, thereby enhancing their viability, but often, it is a good opportunity to expand business and enter new markets, and increase the ability to provide funding to competitive cost.
Alshaikh said: we in CMA embarked on fundamental and complementary steps towards the development of the financial market be reflected positively on the options investors and stabilize the market and attract investors and supports attracting stable creditworthy companies, and we therefore welcome the inclusion of more family businesses that are consistent with the requirements of the FDA and regulations and expectations of the market and investors, and we believe that there are a large number of family companies in the Kingdom in line with the expectations of the Commission ,plans and diversification of the activities of the companies listed. He stressed that the Commission is working and will work to accelerate and facilitate actions turned the family business to the participation and inclusion in the market in a manner consistent with the laws and regulations, both for the body or the stock market or other regulations in force, and we will make sure that the rights of shareholders and traders.
The financial market authority and the financial market have succeeded in recent years in attracting a number of family companies, still an ambitious-and market share that ambition to attract more family businesses. The Minister stressed the keenness to be a safe and attractive market, and we believe that this be achieved through the further development of the market and promote its products. Explaining that the data and figures relevant to the financial market reflects continued authority for its efforts to enhance its role in development and financial market regulation and sound investment environment and incentives for investment and supporting investors ' confidence through the completion of the operational rules and regulations system and promoting securitization and the new investment tools and the development of an integrated and efficient financial services industry and enhance levels of transparency and disclosure, as well as activating the role of the supervisory and regulatory body and improve their performance to provide confidence and credibility in the market and protect investors.
Chamber's Chairman Abdulrahman Al Rashed said : 'the importance of this forum, and our understanding of its importance, in the light of the most popular figures on the volume and value of family businesses in the Saudi economy and the fact their performance and their status within the GDP, so that the family business, according to most estimates are 60 of the size of the economy, and the semantics are overtones in light of more frequent and popular figures on the size of the small and medium-sized companies in the Saudi economy, reaching about 90 size National companies, and the investment of the family business up to about 10 of the Saudi GDP, which gives them great importance, within the national economy, and puts more burdens in the face of challenges and put our economy in a rapid, global variables, and with the growing stature of the national economy within the global economic system, and its prime location within the G20 Club, home of the largest States in the world.
He added that the transformation of the family company to a joint stock company needsupports, an economic necessity for the survival and continuity of the company, in response to the dynamic environment variables, hence, the importance of the transition process to both the companies and the national economy which is open in the international economic system is governed by the principles which guarantee its existence and its continued survival, as it was necessary to expand the membership of the Governing Council, the independence of the Council, and the application of governance standards for real permit to our companies in the new economic environment, local, regional and global, where disclosure and full transparency, and a broader role for shareholders, while protecting the rights of shareholders, all along several criteria increases the chances of success of the company, and its continuation, as well as their survival and existence. He noted that this meeting was a turning point in the process, important family business, and we hope that is a milestone in this huge economic legacy, and look forward to developing solutions to all challenges facing family businesses in the transformation process.
He said the Forum is a valuable opportunity to meet with businessmen and investors in the eastern region, officials in the capital market authority, the Saudi stock exchange (Tadawul), financial advisers and specialists, it also sends awareness into businesses and owners of family firms of the importance of the issue addressed by the Forum. For his part, Chairman of the Saudi stock exchange (Tadawul) Taha Al-kuwaiz, speaking on behalf of the Council Member Khalid Al rabeeah stressed the importance of informing economic entities on how to switch to public stock companies through meeting with specialists in the relevant areas and talk with them and look at the experiences of the family companies when their stock and this transformation challenges. In addition to enable owners of companies and operational departments take appropriate decisions in this regard, noting the efforts of the CMA since its inception to develop this market through regulation and regulations including for subtraction, and reviewed periodically in accordance with world standards and to establish clear frameworks about subtraction.
He said around 95 companies registered in the Saudi family businesses contribute about 50 of the non-oil GDP and employs around 80 of the labor force in the Kingdom. About 4 of family business up to the fourth generation which we must raise awareness about the transition to a public company as one of the solutions and what it requires of separating ownership from management through the application of corporate governance regulations and formulated to safeguard the interests of investors and companies according to frameworks promote transparency.
The shift helps to promote the growth of corporations by acquiring the necessary funding for its expansion plans through a public offering. Despite the many advantages that stimulate family companies to switch to the public but there are only 16 family companies listed in the Saudi market among the 161 companies listed,noting carefully the (trading) through such forums to promote awareness of family business owners about transformation into joint stock companies.
