New act to facilitate transfer of family businesses

A Family Business Act is in the process of being launched by the government, economic affairs minister Chris Cardona said. He said the government was consulting with all stakeholders to make Malta the first EU country to have a formal law on family businesses.

The minister explained that the law would facilitate the transfer of businesses between family members. Around 75% of businesses in are family-owned. 30% are transferred to a second generation, while only 10% make it to the third generation. Cardona noted that around 31,000 small businesses are family-owned and these employ more than 38,000 persons, with some firms employing up to 500 persons.

"The Act should facilitate the transfer of businesses between family members and from generation to generation. We are thinking long term here, because some of the statistics from past years don't look good. Many family businesses pass down to the next generation but only about 30 per cent pass on to the generation after that. This new Act of Parliament should benefit the next generation after us, and the next generation after that," he said.

The law was in line with government action to lift every sector of the economy, Cardona said, adding that family businesses should not be disadvantaged because of their composition.

"One thing that I think we can all agree on is that family businesses should never be underestimated. They contribute so much - to society and to the economy. They keep family close. They are tight knit. They are built on trust. And they are an important part of the economic fabric of Malta - contributing to social stability, commerce, jobs and economic growth," Cardona said.

He said the new law would include a clear definition of 'family business' in order to deter abuse. 

"This proves the government's commitment to incentivise all economic activity, including family businesses, in order to see them flourish and to ensure that they are not disadvantaged because of their distinctive set-up and since no reference was made to such businesses in 2011 Small Business Act."

He added that the government is studying what incentives should be implemented to ensure that the transition is smooth during the transfer of businesses.