MINISTER CARDONA DISCUSSES THE DRAFTING OF THE INNOVATIVE FAMILY BUSINESS ACT DURING A CONFERENCE ON BUSINESS TRANSFERS IN BRUSSELS

Reference Number: PR141372, Press Release Issue Date: Jun 17, 2014
 
In a speech on effective policy and support measures for business transfers, delivered during a conference in Brussels, Minister Cardona emphasised the important role that Family Businesses play in the Maltese economy and discussed the measures the government is taking to ensure the survival and continuity of such businesses. 
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Minister Cardona chose to speak about the importance of effective policy and support measures for business transfers from the perspective of family businesses since these make up approximately 75% of all SMEs operating in Malta and are therefore a main priority for the Maltese government. Dr Cardona said that these family businesses are responsible for the employment of approximately 40,000 people and are a vital force in the Maltese economy. 

Dr Cardona held that, to date, no specific differentiation has been made between family businesses and non-family businesses. Research shows that only 30% of family businesses succeed in transferring business to successive generations in Malta and that this situation had to be addressed by the Maltese government, said Minister Cardona.

Minister Cardona held that one of the main problems of the low incidence of success in the succession and transfer of family businesses in Malta, lies in the fact that there is no clear legal direction when tackling family business dynamics in terms of succession planning, governance procedures, economic planning, consolidation and transfers.

The Family Business Act which is being currently drafted in Malta aims “to promote family businesses and to encourage their continued existence by facilitating business transfers between family members and from one generation to the next without compromising business continuity.” stated Minister Cardona. 

Minister Cardona said that the proposed law is designed to encourage financial responsibility on the side of business and reduce administrative bureaucracy on the side of government.

“We are aware that no such law has been enacted in other EU member states and that this legislation will be a pioneer, allowing businesses to considerably increase their chance of survival and to prosper in what is an ever-increasing competitive market”, added Minister Cardona.

The proposed Family Business Act, which will be presented to the Maltese parliament later on in the year will be the first legislation in the European Union addressing specifically Family Businesses and providing a definition of ‘family’, and who is to be considered as an eligible family member for the purposes of the Family Business Act.

“While we want to assist in the transfer from one generation to the next, the approach needs to be a holistic one and accept the fact and need that when arriving at succession, a family business must in the first instance have good governance, sound operating practices and management in place.” said Minister Cardona. 

Minister Cardona said that the Family Business Act will be an innovative act which will ensure that the hard work, sacrifice and input of a family business is not extinguished because businesses haven’t invested in adequate planning to ensure continuity of the business or its transfer. “It is therefore our role to ensure that these businesses survive”, concluded Minister Cardona.

During the conference, representatives of other EU Member States expressed great interest in the information presented and in following the route taken by Malta by drafting a law that would address the requirements and needs of family businesses in their  respective countries.
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