At the opening of the Forum of turning a family companies
into a joint stock
Chairman of the Capital Market Committee : We are looking forward to transform
the family business into a supportive entities of the national economy
Rabiah: the family companies are of the most important pillars of the national
economy companies
Ataishan: the efforts of many East Chamber to support the transformation
options in family businesses
Chairman of the Capital Market Chamber Mohammed bin Abdullah Al Jadaan said:
"The world is facing at this time a lot of economic and social challenges
and other conditions together constitute a new map of the world economic
faculties at the faculties level, and the level of economic sectors and
producinf facilities in the economy level, the Kingdom is not apart from these
conditions, the multiple challenges and opportunities created by these
difficult circumstances should be used for the benefit of our precious
country, and for the benefit of whom God empowered to build it.
"
Jadaan added in his speech at the opening of the Forum turning a family
business into a stock in 2016 which was organized by the East
Chamber in cooperation with the Saudi Stock Exchange (Tadawul) Wednesday,
March 30, 2016 at its main headquarters in Dammam, and was attended by a
remarkable number of interested people and specialists that the
opportunities are varied for reforming, improvement and development at
all levels, the government at its various levels is working hard to do
its part effectively in the redrawing of national economy roadmap counting in
this regard on the private sector to promote its role in the economic
development and raise the performance and productivity level and exploitation
of the resources the best way and the least expensive and highest value in
general.
And regarding the family businesses Jadaan said it is of a considerable
weight in the economy in the Kingdom, so preserving,
developing and improving it has the priority in the list of all of our attention,
stressing the importance of its transformation into a listed companies in the
financial market, both for the companies themselves and their owners, or for
the market and investors in the market , as well as how this
turning reflects with benefits for the national economy in general
by enhancing the efficiency of the national economy and supporting local product and the preservation of vital
components. He said: "the Committee recognizes the importance of the
financial market as a building channel and capital formation to
support companies growth and sustainability, the Committee is working in
coordination with the Saudi Stock Exchange (Tadawul) and other relevant
authorities to formulate appropriate procedures and initiatives that will
motivate the family companies of various kinds to sell shares and listing them
in the market, to reflect the true extent of the contribution of these
companies in the local economy, without violating the protection of investors,
the Committee hopes that this will lead to find capable economic entities
supporting the national economy and creating more investment opportunities for
all investors. "He pointed that the Committee is working on reviewing and
improving the regulatory framework for offering shares for public communion,
and accelerate the review of applications procedures without violating
the requirements and to ensure the efficiency of the procedures and to maintain
the revisionquality, and Committee hopes that these steps will lead to overcome
any procedural and organizational difficulties.He stressed that the strategic
plan of the Committee reflects the continued efforts to strengthen its role in
the development and regulation of the financial market and provide a safe
investment environment and motivating for investments and supportive for
the investor confidence, and that is through the completion of implementing
regulations and system rules and encouraging issuing financial papers and the
new investment tools and improve making financial services whole and
efficient ,and enhancing the levels of transparency and disclosure,
as well as activating the role of the Committee 's supervisory and regulatory
and improving their performance and providing confidence and credibility in the
market and protecting investors.
For his part, Chairman of the Saudi Stock Exchange (Tadawul) Khalid bin Ibrahim
Al Rabiah said "The most important economic development pillars in our
precious country is the presence of many family and private companies, because
of their prominent role in shaping and guiding national development indicators,
due to what it is characterized by of the providing services and products in
addition to what we are doing to secure jobs for our ambitious
young people to achive their hopes and aspirations for a better future. "
He pointed the keenness of the Saudi Stock Exchange (Tadawul) about the
performance of national and social role through the continuous apprehend to the
dimensions related to the present of those companies and its
future, in addition to the main steps to turn to public stock, and
to clarify the affect on its future, and that through events it organizes
and participate in, and workshops it holds regularly.
He added that Tadawul is showing the advantages of family companies
turning to joint stock companies at the same time, as well as the benefits
of listing them in the Saudi stock market as this guarantee to them the
application of international best practices in terms of transparency,
governance and investor relations, and have an increased management and
operation and the distribution of tasks effectively, which leads ultimately to
achieve a marvelous leap in terms of expansion, development and
competitiveness, support and enhance the company's brand identity and increase
confidence.
The chairman of the East Chamber Management Abdulrahman bin Saleh Al Ataishan
said: "The family companies, is considered the backbone of the economies
of many countries of the world, not much is different in the Kingdom, with what
these companies occupy of a wide area in the national economy, with
investments exceeding a rate of 12% of gross domestic product, and there
are expectations in light of the national will by activating economic
diversification system, that it reaches the end of this year to more than
16%"
He noted that the family business turning into a stock, a first step in a
journey, aiming at business continuity through the generations, which must be
released not only from the point of readiness for listing, but in
conjunction with the obligatory with the changes in the philosophy and behavior
of the original owners, which helps the company's management and sustainability
to work as a homogeneous and compatible team.He added: "out of the fact
that ideal solution to the sustainability of the family business lies in the
transition to stock and the application of governance procedures, which depends
in large part on education and awareness, the East Chamber made positive steps
in supporting the family business; it has achieved a consulting program for
family business in cooperation with the houses of local and international
experience distinctive successes in providing a path to transformation and
governance roadmap without obstacles. "
Ataishan appreciated the huge efforts made by our government in
order to enhance the performance of the future of the family business, finding
the necessary legislations to ensure its development and continuity.
And His Excellency Jadaan honrod sponsors: diamond Sponsor Al Jumaih
Holding Company received the shield Majid Al Jumaih, and as Financial diamond
sponsor received Shield, Ibrahim al Assaf, and Falcom Financial Services
Corporation as the main sponsor and received shield Adib Al Suwailem, and
feasibility Investment Company
,and diamond Sponsor received shield Omar Al Jalal, and Bassam group
companies diamond sponsor received shield Ali Al hudab, and Mohammed Al ajimi
as a platinum sponsor received the shield Salem al ajimi, and Dar Alyum
for media as a media partner and received the honor Mohammed Al Sahli, and
Iktisadiah the space channel sponsor and received shield of Salih Al
Agrafi.
Rabiah also presented a memorial gift from the Saudi Stock Exchange
(Tadawul)
Chairman of the East Chamber Management Abdulrahman bin Saleh Ataishan
and another sponsor of the event Chairman of the Capital Market
Committee, Mohammed bin Abdullah Al Jadaan
Ataishan and presented a souvenir to the Chairman of the Saudi Stock Exchange
(Tadawul) Khaled Al-Rabiah and a commemorative gift to Jadaan sponsor of the event.
First session: Good selection of financial consultants as a breaking point in
the transformation journey to stock
four family firms representatives listed in the financial market, have
agreed on that bravery and not hesitating to transfer to a joint stock company,
achieves many future benefits, in terms of continuity and permanence of name
and activity of the company with the increase in the actual market value,
stressing that the good selection of financial advisors, as a breaking point in
the transformation journey, stressing the importance of documenting the rules
of governance as a modern managing concept .
They also stressed the importance of all the preparation and processing of the
process of transformation, by arranging inner matters, especially the financial
management, the composition of the Board of Directors, and other related
matters, pointing to the need to develop a written plan for the transition to
make it easier to follow.
This was during the first meeting of the Forum of family businesses turning
into a stock, which is organized by the East Chamber in cooperation with the
Stock Exchange (Tadawul), and under the patronage of His Excellency the
Chairman of the Capital Market Committee, Mohammed bin Abdullah Al Jadaan.
The session, which has witnessed a significant presence of men and
businesswomen of eastern region, and a crowed of interested specialists, was
managed by D. Abdullah Abdulqader, Chairman of STC, and both, Executive
Director of Halawani brothers company Salih Hanafi, and Managing Director of Al
Mwasah for medical services, Mohammed Al Saleem, and Mr. Joseph Al
Gafari, Executive Director of Othaim Markets, and Mr. Ayman Almdefr, Executive
Director of Andalus real estate company.For his part, the Executive Director of
Halawani brothers company, emphasized that the turning the company
to a stock, he came out of conviction owners need to ownership separated from
management, their faith in institutional work, noting that the company turned
to the institutional work in various operational departments since the nineties
either sell or hand collection, which has had the greatest affect on preparing
it to stating process in 2007, speaking about the issue of control and what
revolves it of misconception among some of the fact that the stating might
loses its founders their control, explaining how important the founder
existence whatever the percentage, in the short and long term in the system of
administration .
As Mohammed Al Saleem, Managing Director of Al Mwasah Medical company,
spoke about the challenges faced by Al Mwasah at the start of the
transformation, saying that it not challenge as much as was an insistence of
the owners to maintain the entity and moving it smoothly through the
generations, so the choice was on starting that equipped the company preparing
it the right way for public stating, pointing the achievements of Al
Mwasah of doubling its profits and also expanding its services, referring
to practicing the methods of governance, disclosure and transparency.In the
same context, Yussef Alagafari, executive director of Alothaim markets
,presented a brief explanation of the benefits of listing, stressing that it
doubles the value of the company making it more stable and even gives the
sustainability of their activities, pointing to their experience in Othaim
Markets Company, and how the decision was made to transform, when the
Chairman of the Board noticed the collapse of the family entities in front of
him, pointing to the role of chairman of the board and hid wisdom,
although it was less than the origional value.
He concluded from his part, Ayman Almdefer, Executive Director, of Al Andalus
Co. Real Estate, said that the real estate sector, especially the
productive real estate, always in need of huge funding, and
therefore diversify of the participants base, pointing that this nature made
the statement as a general agreement among owners range from the start,
pointing that Al Andalus Real Estate was launched to continue, and
then the choice is offering as the ideal model for the continuation of
companies in the real estate sector, advising, the need for careful choice of
good financial advisors for their added value that is positive to the company.
Session II: Disclosure and transparency are first steps of turning private
companies to stock
Speakers in the second session of the Forum of turning a family business
into a stock in 2016 which was organized by the East Chamber Wednesday 30 /
March 2016 on the positivity of transformation of companies to public offering,
to achieve the growth and sustainability of the company, as well as the shift
opens up investment channels for liquidity in the local market.
And reviewed during the meeting that the title of the campaign (how to
transform from family businesses to a stock) all the procedural and legal steps
for turning private companies into joint stock companies, and requirements of
the application of inner systems characterized by disclosure and transparency.
The session was managed by the Secretary General of the Committee of
Information and banking awareness of Saudi banks Talaat Hafez during
which he spoke of each of the primary markets director of the Saudi Capital
Market Company (Tadawul) Naif Al Athel, and director of the private investment
firm the feasibility of investment Amr Galal, the head of the investment
banking group company Falcom the Financial Services Wissam Al Khasawneh,and
Wisam Freihi and the Order of the Corporate Finance Department of the Capital
market Committee .
In this regard, financial markets director, company trading Naif Al Athel said
that the public offering is important for both sides of the public
offering (the company wishing to subtraction, and the investor who wants to
public offering), it is the company's hand is for her an opportunity to give up
part of their assets and get cash to help in the financing of some projects
that they want, first offering is a strategic decision of the company to
reorganize the structures and move forward .. while the first offering for the
investor is an opportunity to invest in a new company that can happen to
him in additional revenue, specially.
He pointed that the overall return of the first offering is after the public
offering because in most public offering witnessed by the local
market we have noticed that the stock after the public offering is higher
than its price in the public offering and the public offering price, and
this is a strong indicator of success, and the coverage of ten public
offering rate a recent experienced local stock market more than six times the
value, and this shows on the solvency of the Saudi investor, high levels
of cash in the local market, though this phenomenon in a certain
negative side showed a lack of investment channels attractions.
He pointed that the benefits of offering in the financial market is
to achieve the continuity of the company, and to achieve ease of assessment,
the fact that the company is committed to subscribing in the market is higher
than the level of transparency, and are subjected to a number of systems that
protect its rights and the rights of the investors.
For his part, private equity manager Company feasibility of investment Amr
Jalal spoke of the steps the public offering, saying that the norm among
some companies that once a resolution transformation of the individual company
or a family company into a joint stock company to be appointed a financial
advisor, so some owners get surprised that the company is not ready to
lead the loss of investment, hence the readiness should be emphasized of
the company's public offering before deciding Among the most prominent
landmarks commitment to disclosure, inner control, and governance and
separating the ownership from management, and developing action map, and these
steps may take a long time, then comes the selection step of the financial
adviser, the company is (any company) If it wants to transfer it should
be a real desire, according to it the obligation to apply the criteria to
establish an institutional nature has.
He stressed that a public offering is a way for transition from a private
company to a public company, which is the guarantee for the continuation of the
company and its survival in the market, there are the observing eye, reducing
the risk of generational succession that gets in the family business.
The head of the investment banking group company Falcom Financial Services
Muaath Al Khasawneh has talked about a number of challenges faced by
companies during the transition year for the public offering, namely:
"the mechanism of decision making, cost and time, and disclosure and
transparency," In private companies the decision is made mostly by the
owner of the property, but if they are listed in the market, the board of
Directors is the decision maker, and some decisions are forwarded to the
participants, so the company decision is ruled by a number of measures,
even the company up to the level of the public offering have to exceed
the mechanism of decision making .. the disclosure and transparency, we find
that some companies get embarrassed to display their information to the public,
and this is a challenge faced in the transition year for the public offering,
it must comply with the capital market Committee , which recognizes the
disclosure of financial information systems, and fundamental changes in the
administration, which should be clear to investors in order to enter into
public offering in the company and things are clear process, some companies
delayed to ask for the public offering process because of the delay
in disclosure and transparency processes .. as for the cost and time, the
readiness for inclusion in the stock market takes time and effort, it requires
the company to form a full team, advisers, employees, all this requires a
number of expenses as well as media coverage of the campaign,
Al Khasawneh said that the public offering process often comes in accordance
with the stages, is the first stage in the decision-making that should be well
thought out, and that things be clear to the owners that there is a change will
occur if the public offering is complete at all, and after the decision
is made, financial advisers, accountants and legals are pointed, then the
bulletin is issued, which is the official agreement disclosure process control
they contain all the information of the company, and after the decision of
placement is determined by the stock, which is often on the company's financial
position and performance of the price, on the other hand on the economic
situation factor in the country in general.
Sam Freihi (from Banking Financial
Market Committee ) has talked about the regulations as the requests of the
public offering, he said that there are duties companies should be adhered to
by the progress of the public offering , including disclosure and rules of
listing requirements, and the requirements related to the same company if they
have not had to rerestruct recently, and that has made its financial
statements for three years,
He noted that the Committee does not set any standards for the Company's
activities, such as profits and sales, nor does it indicate that it should be
the company's trump card, but the reality tells that any company to introduce
to the public is bound to be a success story in order to achieve a certain
attractiveness for investment.
He stressed that the international standards in the stock market will be
applied to all companies registered in the market, at the end of the meeting
seminar speakers manager have been honored.
Session III: Governance option of family businesses towards the quantitative
and qualitative development of the business
In the third and final session, titled (governance and family businesses) and
was led by Dr. Ihsan Abu hulika chairman of Goatha Advisory
Business Development Center, Dr. Sami Al Wahaibi of King Fahd University of
Petroleum and Minerals, and an expert on family businesses, said the company's
four main components protecting them, the first of which It is (hardware): the
Council of family and the board of directors and family office, and order and
the General Assembly, and the agreement of the family, and
regulations of the board of Directors.
The second is the (human): It is a protector who manages the process of
protection in the family is located in the Board of Directors and the Council
of the family, and it is protected landlords themselves.
And third (knowledge) and should be available in the family members, the
sufficient knowledge in dealing with the regime, and the fourth component
is(culture).
Al Wahaibi said that the success criterias should be related to the goal of
governance in order to protect property and the gains of the company, pointing
that the true criteria is quantitative and qualitative development of those
gains and property, and also protecting the unity and of the owners if they
differ, and the presence of a high level of sacrifice and cooperation of
stakeholders level.
For his part, the legal adviser Salman Al Sudairi said that the most
sensitive subject when family companies transform is abandoning control of the
company and the participation of the decision makers with other people, and to
deal with this, culture needs to change too on this subject and also the way of
thinking.
Sudairi pointed that there are may be a transform in the company's business
and this is a reality with a view to continuing business with successive
generations.
As the promise of transparency and disclosure is the second biggest topic
of sensitivity in the family, and we say here that it is necessary
to deal transparently with the beneficiaries and their interests with the
company where they have a right to know what is happening to the company.
For his part, Ahmed Al kazlan of the management of governancing companies in
the Committee of the Capital Market that the Committee hold periodically
educational workshops, special topics and details of governance, where it
performs its role in educating family businesses and the statement of the
importance of the shift to them.
Al kazlan said that the Committee has issued compulsory provisions
amounted to 22 sentence applied gradually, which are concerned with the
composition of the Board of Directors, showing the minimum of members and
explaining the responsibilities of the Council and the procedures followed in
the implementation of the responsibilities and powers, as it explained the
responsibilities of members of the council and the powers of the Chief
Executive Officer, as well as contributors ' rights and duties.
