Saudi Ministry of Commerce Issues Guiding Charter for Family Businesses

Saudi Ministry of Commerce Issues Guiding Charter for Family Businesses

Sunday, 13 May, 2018 - 10:15
Riyadh - Asharq Al-Awsat
The Saudi Ministry of Commerce and Investment issued a guiding charter for family businesses aimed at bolstering family business values, achieving the targets of the companies and developing their businesses.

The Guiding Charter is seen as a reference document for businesses to regulate family-run properties in the company. It also acts as a company record that shows what the company holds in value to the family.

In addition, the Charter regulates relations between family members, including the wills and wishes of the founders, transfer of ownership among family members in family businesses, and the criteria for the employment of family members in the company. It sets out rules for resolving disputes that may be encountered.

It aims at maximizing the value of a company and developing its business, as well as educating the members about their rights and obligations, while balancing the interests of the family members and the company's interests. The charter should strengthen the family members' ties to achieve success and bolster their contribution of serving the national economy.

The Charter is characterized by organizing the work of family members in the family company's executive system, determining the profit distribution policy of the company and devising mechanisms for the shareholders to dispose of shares.

The Charter Development Mechanism aims to establish a written institutional organization, create a common understanding among family members on how to manage their current and future commercial ownership.

The Ministry was keen to tackle the problems that weaken companies and lead to losses in their resources and financial gains.

The Ministry also reviewed a number of international examples and specialized studies to benefit from and reach a model that meets the needs of the Saudi family business community.

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