Structuring Family Businesses Dr Johannes Bruski AbdulAziz AlGasim Structuring Family Businesses A Step by Step Process

Structuring the organization Legal issues relate to each step in the structuring process. They must be dealt with in context.

Fact Finding: Goals As part of the first step, fundamental business and other goals should be identified and ranked as a guideline for further review and (legal) structuring. These many include: Ensure Long-Term Business Success and Resilience Ensure Continued Family Influence Ensure Orderly Succession Ensure Fulfilment of Social Responsibilities Provide for Fair Treatment of Exiting Family Members Ensure Equal Treatment of All Family Members Ensure Respect for Family Values And Enterprise Culture Ensure a Proper Separation between Family Members as Shareholders and as Business Managers Minimise Costs and Expenses of the Chosen Structure

Fact Finding: Risks and Issues An indicative list of typical risks and issues is given below (not necessarily exhaustive):

Defining Policies: Identifying Typical Issues It may be helpful in exploring the position the family and the owners wish to take in respect of the following issues that are present in many family businesses and may require particular (legal) solutions.

Defining Policies: Identifying Success Factors It may be helpful to single out the factors that have been relevant for the success of the family business in the past or that may be conducive to continued or even increased success in the future. These may include (but not be limited to):

Defining Policies: Fundamental Decisions Family and/or owners should agree on fundamental structural, strategy and policy decisions. These may include, inter alia:

Putting it together: The Final Structure Basic Agreement on Fundamental Principles Family Council and Family Office Governance Related Options Terms and Conditions of a Transfer of Shares (or equivalent rights) Certain Policies Sanctions in Case of a Violations of Agreements Liquidity Programs for Owners Risk Diversification and Ring Fencing Management of Passive Assets and Family Office Contingency Planning for Identified Risks Tax Planning Estate Planning

The Final Structure continued Basic Corporate Set-up Alternatives Pooling Company Structure Holding Structure Domestic Trust Structure Family Foundation Structure Foreign Truest or Foreign Family Foundation Structures Pooling Agreement Structure Closed Investment Fund Structure

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