Government still working on Family Business Act - Economy Minister

The government is still working on a ‘Family Business Act’ that will make Malta the first EU member state to adopt legislation for the transfer of family-run businesses between generations, Economy Minister Chris Cardona said.

The Act would provide a legal basis for the transfer of family-run businesses between one generation and the next, facilitating a smooth business continuity. 

He was addressing a seminar on Tuesday morning about business transfers as part of the 2014 SME week.

“Around 70% of Malta’s businesses, 85% of European businesses and 90% of American businesses, and practically all the oil-producing companies in the Middle East are family-run,” Cardona said. “Family-run businesses tend to be held together by a special family bond and business tends to run smoothly under the first two generations.
“However, problems still exist among some family-run businesses, such as unwillingness to give up control, nepotism when it comes to handing out promotions, and interference of previous owners on the running of the business,” Cardona said. “Indeed, family-run businesses tend to weaken by the time they reach the third generation.”

Cardona had earlier said that only 10% of family-run businesses who reach the second generation manage to make it through to the third generation.

Yet Cardona cited a survey saying that confidence in market conditions amongst family-run businesses has risen and that these businesses are not as concerned about their access to finance and credit as they were half a year ago.

Cardona launched a consultation exercise on the Family Business Act back in July 2013.