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Succession Planning must be in place for family businesses. Here's Why!

出版物 / 文章 / 2021 / Succession Planning must be in place for family businesses. Here's Why!
What is Succession Planning?

Succession planning is a very crucial process followed by family business leaders ensuring business continuity for generations. In order to pass on leadership roles, often ownership of a company is passed on to an employee or group of employees through which the family heads set out the terms for business transfer to future business owners.

Prime advantages of succession planning:
  • Wealth retention within the family
  • Businesses are able to thrive and succeed through the sudden and unexpected period of transition
  • Prevention of conflict and disruption to the business
  • Talent retention and planning for long term
  • Older generations can retire and turning over ownership and management to the younger generation
Based on the plan for the business succession, families may choose the following methods of succession

Trust:

The concept is recognized in two jurisdictions within UAE – Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM).

Family offices:

These are: Privately held companies for wealth management, asset and legal affairs management of families. Further into two types of family offices are: single-family offices (SFO) and multi-family offices (MFO). Within UAE, Dubai International Financial Centre (DIFC), Abu Dhabi Global Market (ADGM), and Dubai Multi Commodities Centre (DMCC) have provisions for single-family offices. Minimum share capital requirements differ with respect to different jurisdictions as well.

Foundations:

Foundations are meant to govern the assets and properties of the Founder or any other person, it is a distinctive corporate legal personality, and an autonomous body. Foundations are entities which are an alternative to family trusts and can be considered a smart approach for financial planning and structuring.
Usage of Foundations is for plenty of purposes, including wealth management and preservation, family succession planning, tax planning, asset protection, business growth, employee share schemes, corporate structuring, and public interest purposes (excluding charities). In UAE, one can consider either of the two jurisdictions: a) RAK ICC Foundation, b) Abu Dhabi Global Market (ADGM) Foundation
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About Freemont Oneworld group

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