UAE urges family businesses to list on local stock exchanges

UAE encourages more Family Owned Companies A senior government official said the listing of shares on the country’s stock exchanges is a move to ease succession in companies and provide more liquidity to local stock exchanges.

“We have been very encouraged, we have seen the family owned companies organize themselves to be able to partially or completely get out of the IPO. [initial public offering]Ahmed Al Falasi, Minister of State for Entrepreneurship and Small and Medium Enterprises, said the National On the sidelines of the Senior Executives Forum in Dubai on Thursday.

“Once that company is listed, the level of data that goes into the operations makes it easier as well for succession and inheritance, because now you’re on the list, you’re reporting and reviewing, you’re in the shareholder structure that also makes it more convenient for succession.”

In addition, Al Falasi said the listing of more “big-name” family-owned companies and “large conglomerates” is injecting significant levels of liquidity into the UAE stock markets.

“Adding that cash… goes a very long way,” the minister said.

However, some family business owners choose to retain control of the company, he said.

“It’s hard to understand that you can still be a family business and be listed… When you state that you’re not giving up on your company, you become a better organizer.”

The Abu Dhabi Securities Exchange, the second largest in the Arab world after Saudi Arabia’s Tadawul, more than doubled its market capitalization last year to a record 1.6 trillion dirhams – making it one of the best performing exchanges globally in 2021.

Although IPO activity has slowed globally in the wake of the Russian war in Ukraine roiling stock and commodity markets, interest in IPOs has remained strong in the GCC markets. Rising oil prices and a strong economic recovery boosted investor confidence and boosted liquidity in the UAE capital markets.

Dubai, which aims to boost its stock market amid a growing appetite for initial public offerings in the region, revealed plans last year for the listing. 10 state-owned companies As part of its strategy to double its size capital market to Dh3tn and attract foreign investment.

Family businesses represent about 90 per cent of private businesses in the UAE. The UAE Ministry of Economy said last year that it was studying the matter New policies to help family businesses grow Because it forms a vital part of the country’s ongoing transition to a more sustainable economy.

In January, the United Arab Emirates released a file Family Business Governance LawEnhancing the sector’s contribution to the economy and facilitating the transmission to successive generations.

Al Falasi said that the focus is now on the small and medium-sized family business sector and provide them with guidance on best practices.

“What we have found increasingly difficult in the region is that third generation family owners are running the business as a one-man show. We want them to organize the business in a way that uses continuity to move forward – and that doesn’t necessarily happen until they reach billions [stage]. “

Ahmed Al Falasi said listing more family-owned businesses

Al Falasi said that consultations are underway with a range of small to medium family businesses to understand their requirements.

Such companies have highlighted the need for guidelines on structuring their businesses, getting affordable legal advice about structuring and changing the way of thinking about talking about succession between different generations in a family-owned business, he said.

Al Falasi said that policy makers are encouraging more family businesses to go public by making the markets more attractive and liquid and amending regulations to make it easier for these companies to be listed. NASDAQ Dubai Growth MarketA stock exchange launched in 2020 to help small, fast-growing businesses gain access to the capital markets.

The exchange allows the listing of small and medium-sized companies with a value of less than $250 million. The companies only need to operate for one year, compared to three on Nasdaq Dubai’s main market, and can sell at least 25 percent of their shares, allowing founders to retain control.

Updated: May 19, 2022, 1:20 pm