During a meeting organized by Asharqia Chamber remotely
Hammad: Governance has a positive and effective role in reducing the effects of the Corona pandemic on family businesses
Dr. Adly Hammad, partner, lawyer and legal advisor at Hammad and Al-Mihdhar Law Firm emphasized that governance has a positive and effective role in reducing the effects of the Corona pandemic on family companies and that for companies to emerge from this crisis, they must apply the rules of governance by achieving the arrangement of the internal house, and activating the role of the Board of Directors with a contract It meets weekly, as well as activating the role of the Council of Partners, and maximizing oversight and transparency.
He said that this crisis requires companies to re-establish their strategies and achieve effective communication with partners to prevent conflicts of interest, with a focus on preparing rescue plans to face organizational crises and implement them in the best possible way, pointing out that the excess of confidence in traditional investment and weak attention to the unknown are among the reasons for not The company's ability to weather crises, classifying the sectors affected by the crisis into sectors of high, medium and low exposure, and that the latter comes as a future option for expansion in front of family businesses.
This came during a meeting organized by Asharqia Chamber in cooperation with Hammad and Al-Mehdhar Law Firm, on Saturday 16 May 2020, through the “Zoom” program, and it was titled (The Role of Governance in Protecting Family Companies from the Corona’s Pandemic Effects).
Hammad pointed out that the crisis of Corona has successive and accelerated economic losses estimated by the International Monetary Fund at about 9 trillion dollars, and the impact of this crisis has spread to owners of companies and family wealth, as a result of the imbalance in their contractual balances with many parties, which created a legitimate fear of a future situation that has become It is characterized by hazy and difficult expectations, and that governance has positive repercussions in reducing the effects of the pandemic, pointing out that governance is a more comprehensive system than the corporate system, and that each company has its own rules of governance due to the differences between the sizes and nature of companies, and the consultant is the one who ensures the achievement of Initiation of corporate governance and activity.
Hammad pointed out that governance has principles (6) that start with accountability, so that the decision-maker has the ability to clarify and justify, and passes the responsibility that guarantees the effective performance of tasks and the best existing capabilities, fair and equitable treatment for all parties, and transparency that ensures that all the company's operations and data are clear and available to Stakeholders, and ends up with a vision to establish a long-term value for achieving sustainability and growth, and outline the ethics system by creating codes of conduct and dealing with ethics of the profession.
Hammad pointed out that proper structuring with its legal and active implications and separating ownership from management is the main starting point for adopting effective governance standards, pointing out that enabling the family to participate in the management of the company in accordance with a clear institutional framework prevents any family members from interfering in other than its terms of reference Put it in the company.
Hammad said that all companies, including family, face internal and external influence factors and risks, and here comes the ability of the company's management to predict and prepare for potential economic and organizational changes, pointing out that there are many reasons that affect the ability of the board of directors to make decisions, such as unprecedented global crises ( Corona crisis), lack of knowledge of the actual damage, absence of financial preparedness and contingency plans, supply chains disrupted, and finally the absence of accurate information on the duration of this crisis.
