Malta’s first ever association to represent family businesses and to lobby for their interests will be launched in mid-February, FBS2M managing partner Mario Duca told The Sunday Times.
Spearheaded by the Pietà-based family business consultancy, the association and its transitory committee will be introduced at the third Annual Family Business Conference at The Palace hotel in Sliema on February 15.
The association enjoys the support of several prominent local family businesses, and aims to be fully operational in a few months’ time, after having appointed a permanent committee and drafted its statute.
Mr Duca said the association wants to be the first formal organisation to educate family members to work together within their business.
“The association aims not only to get family businesses organised but to get business families organised as well,” he added. “Family business will start to have a voice at a national level. One of the major issues that need to be discussed is the tax implications of the transfer of shares within family businesses, which is not specifically governed by current legislation. A formal organisation focused on the improvement of family businesses and the legal conditions of families is a must.”
Mr Duca pointed out that the only way ownership of a family business could be transferred without incurring tax was by ‘donating’ it to the children or through inheritance. Family businesses, he stressed, were Malta’s major economic force yet received little support when they came to hand over their legacies legally and above board.
“Most of the wealth of families in business is tied up in their firms – it is not mainly cash,” Mr Duca explained. “Because there is no specific legislation, transfer and succession sometimes cause great hardship and financial burdens on heirs. In some instances, heirs have forced to dissolve the business.”
He hoped the association would gather the widest representation possible for local family firms. Some of the most prominent medium and larger family businesses have already pledged support, he said.
Besides Mr Duca, the association’s founding members include Pier Luca Demajo of Demajo Group, Jean-Philippe Chetcuti of Chetcuti Cauchi Advocates (which is drafting the association’s deed), Mary Gaerty of Green Skip Group, and Angelo Xuereb, founder of AX Holdings.
Mr Duca said the association’s proposed objectives include the promotion of research into family businesses and business families.
It also aimed to disseminate data and educational materials, besides collating material on Maltese family businesses. Other plans include specific training services, and encouraging local and international links with similar groups and family business communities.
The association was determined to actively support family businesses and lobby government and other authorities on their behalf.
In its initial phase the new association will benefit from the expertise of Martin Stepek, chief executive officer of the Scottish Family Business Association. Mr Stepek will be one of the keynote speakers at the conference next month.
This year’s theme is ‘Intergenerational perspectives: Working with siblings, conflict, trust, and development of the next generation’. Mr Stepek will draw from his own family’s experiences and highlight pitfalls family firms might face.
Another speaker is lawyer Ken McCrachan, a consultant for Family Business Solutions of Glasgow who has often travelled to Malta.
Amelia Renkert-Thomas, president of Fischer-Renkert LLC of the US, will illustrate ways to plan for the future of a family business and the family, and how to deal with trust issues within firms. Fischer-Renkert LLC is an international law firm specialising in family business issues.
Local speakers will include Mr Duca, who will focus on developing the next generation for ownership and management succession, AX group founder Angelo Xuereb, who will give his own perspective on the transition from the first to the second generation, and Alex Aquilina, who will relate his own experience of taking over the management of Eagle Knitwear from his father.
In the meantime, FBS2M has been actively pursuing its business training objectives. Mr Duca believes awareness of good governance and succession issues within family businesses has been heightened over the past few months.
He said “success rates for family business succession” were mostly possible through education.
The first intake of the recently launched Certificate in Family Business Governance had been fully subscribed. A second and third intake are to open concurrently shortly.
The training programme, led by local and foreign professionals, accommodates 10 to 12 participants. Each course comprises eight three-hour sessions covering issues such as ownership governance, change management, conflict management, legal considerations and succession planning.
FBS2M has also designed two separate in-house programmes for two prominent family businesses.