Dr. Sami Alwuhaibi Participates in the forum " Turning Family Businesses into Joint Stock Companies Forum "
Dr. Sami Alwuhaibi, founder of Awuael Holding and Assistant Professor of Strategic Management and Family Business at King Fahd University of Petroleum and Minerals, participates in Turning Family Businesses into Joint Stock Companies Forum, launched by Asharqia Chamber in its headquarters in Dammam on Wednesday 30 March 2016, under the patronage of His Excellency the Chairman of the Capital Market Authority Mohammed Aljadaan, in cooperation with the Saudi Stock Exchange "Tadawul".
The forum aimed to review the role of transforming family businesses into joint-stock companies to maintaining the continuity of the family business and ensuring its growth and development, especially in light of the current economic challenges.
Dr. Alwuhaibi explained, in the third and closing session of the forum, which was attended by specialists and academics to discuss axes that meet all aspects of transformation from a family-owned company to a joint-stock company, managed by Dr. Ihsan Buhulaiga, President of Joatha Business Development Consulting Center, the impact of the application of the rules of governance on family joint-stock companies, the advantages, and challenges after the application of governance, and discussing some advice in this regard.
Dr. Alwuhaibi pointed out that companies have 4 main components that protect it. The first is the family council, the board of directors, the family office, the system and the General Assembly, family constitution, regulations of the board. The second component is human being: the protector who runs the family protection process and he is in the board and the family council, and the protected people are the owners themselves. The third component is knowledge: family members must have sufficient knowledge in dealing with the system, and the fourth component is culture.
Dr. Al-Wuhaibi also pointed out that success criteria must be linked to the objective of governance in order to protect the company's assets and profits, and that the real criterion is the quantitative and qualitative development of these assets and profits, as well as the protection of the unity and cohesion of the stakeholders if they differ, and the existence of a high level of sacrifice and cooperation among stakeholders.
Mr. Abdulrahman Saleh Alotaishan, Chairman of the Board of the Chamber Directors, delivered a speech in which he stressed that the participants in the forum are discussing the practical steps taken by some family companies in their attempt to become joint-stock companies in order to benefit from the lessons learned and disseminate them to the business sectors wishing to start their first steps towards transformation.
Mr. Alotishan explained that all the topics in the forum are related to family businesses and their future, and that the forum seeks to achieve several objectives, namely presenting of the positive implications of the transformation of companies from family-owned to joint-stock, and economic awareness of safe transformation procedures and the importance of implementing governance in family businesses, and the extent of their positive impact on the sustainability of the company across generations.
He also pointed out that family businesses are the backbone of the economies of many countries of the world, and it is not very different in the Kingdom, as these companies occupy a large area of the national economy, with an investment volume of more than (12%) of GDP, and there are expectations in light of the national will to activate the system of economic diversification to reach this percentage by the end of this year for more than (16%). He also mentioned that the transformation of family-owned company into a joint-stock company is the first step in a journey that aims at the continuity of business across generations, which should be launched not only from the point of readiness for inclusion, but also with changes in the philosophy and behavior of the original owners. The best solution for the sustainability of family businesses is to transform them into joint-stock companies and the implementation of governance procedures, which depends in large part on education and awareness. The Chamber has taken positive steps in supporting family businesses. The Family Business Consultancy Program, in collaboration with local and international expertise houses, has made a remarkable progress in providing a roadmap for transformation and governance without obstacles.
Alottishan noted that the forum is a message to the business community and family business owners about the importance of applying the rules of transformation and governance procedures, and clarifying the ways and means of transforming and reviewing the previous experiences of the listed family companies as well as raising awareness of the challenges that may face them in the near future.
In talking about the scientific program of the forum, Mr. Abdulrahman Abdullah Alwabel, the Secretary-General of the Eastern Chamber, said that the first session is dealing with the experience of family businesses, and managed by Dr. Abdullah Al-Abdalqader, the Chairman of the Board of Directors of the Saudi Telecom Company, and addresses several axes: the stages of transformation, challenges facing the shareholding companies, Interspersed with the introduction of a number of tips and recommendations, which flow in the same direction.
He also said that the second session will discuss how to transform a family-owned company to a public joint-stock company. It will be managed by Mr. Talat Hafiz, the General Secretary of Media and Banking Awareness Committee for Saudi Banks. It will address a number of topics such as the Saudi listing market, listing advantages and challenges and financial market services.
Mr. Salman Alsudairy, legal adviser, said that the most sensitive topics when thinking of family businesses in the transition to joint-stock companies is to give up control and share the company's decision with other people, and to address that we must change the culture on this subject and also the way of thinking.
Mr. Alsudairi pointed out that there may be a shift in the company's business, and this happens for the continuity of the company's business for successive generations. Transparency and disclosure are the second most sensitive issues in the family, and it is necessary to deal transparently with the beneficiaries and those with interests with the company where they have the right to know what is happening to the company.
Mr. Ahmed Alqazlan, Director of Corporate Governance at the Capital Market Authority (CMA), said that the Authority regularly holds educational workshops on the subjects and details of governance, as it plays a role in educating and educating family businesses and indicating the importance of transforming them.
"The Authority has issued mandatory provisions of (22) provisions that have been applied gradually, which are concerned with the composition of the Board of Directors, the minimum membership statement, clarifying the responsibilities of the Board and the procedures followed in implementing the equity and duties.