More than 150 businessmen from the capital are expected to participate in an evening forum on ‘Governance in Saudi Family Businesses’ scheduled in Riyadh on Sunday.

“The Council of Saudi Chambers of Commerce and Industry (CSCCI) in cooperation with the PricewaterhouseCoopers (PwC), one of the largest business advisory practices with over 260 consultants based in the Kingdom, will conduct the forum which will give an insight into the governance of family businesses,” CSCCI Vice President Ibrahim Al-Hudaithy said yesterday.

The private sector in the Kingdom is largely composed of family businesses. “The forum is organized to enhance awareness about the importance of instituting governance in family businesses for its role in development, prevention of corruption, prosperity of business and generating revenue,” Al-Hudaithy said, adding that it will also promote healthy competition within the various entities and organizations.

In a survey conducted by PwC in 2010 involving some 1,600 executives working in 15 industrial sectors in Saudi Arabia and 34 other countries, it was found that failures of most family businesses is due to the lack of succession plan, family conflict, and failure to consult other members of the family, which is indicative of lack of communication.

In the Middle East, over 80 percent of the family businesses are either owned or controlled by families. Many are now managed by second and third generations of managers.

Based on these facts, the CSCCI recognized the importance of partnering with PwC, a major professional financial services firm to organize this forum in an effort to achieve the objective of moving up the priority of family business owners to introduce governance in their family businesses.

The forum will be designed to offer key areas of challenges and present solutions to all stakeholders involved in family governance implementation, from family business owners to board of directors. The event is expected to lay emphasis on changes to corporate governance practices to enhance board transparency, increase director accountability and give greater voice to shareholders over critical boardroom decisions.

The forum will include key presentations by Abdullah Al-Abdul Gader, founding executive director of GCC Board Directors Institute, on ‘Board Effectiveness’ and ‘Understanding Family Dynamics and Family Conflicts” by Amin Nasser, partner of the Middle East Family Advisory Leader at the Pricewaterhouse Coopers International in Dubai.

“We are witnessing growing corporate governance awareness across GCC boards in general and family owned businesses in specific are adopting corporate governance to secure their future. Statistics show that only 15 percent of family business entities would continue after the third generation due to the absence of governance,” Al-Abdul Gader said.

He added that strong corporate governance helps protect minority shareholders, improves performance, ensures that companies use their resource more efficiently and increases access to capital, all needed for sustained long-term family-run business and contribute to economic growth.

Nasser said: “The two greatest threats to family businesses continuity in the GCC are conflicts between family members and lack of proper succession planning. Conflicts in family business arise when situations are unclear, not properly understood or communicated. Other issues likely to cause tensions in a family business include agreeing the future strategy of the business and family members working in the business.”