Malta aiming to be the first EU state with a Family Business Act

The government launched a consultation exercise on a 'Family Business Act', in a bid to become the first EU state to adopt such legislation.

The 'Family Business Act' would aim to ensure the continued existence of family businesses and facilitate business transfers between family members without compromising business continuity. It also aims to encourage financial responsibility on the side of the business and reduce administrative bureaucracy on the side of Government.

The Minister for economy, investment and small business, Chris Cardona, said that family businesses make up 75% of the local industry, employing around 40,000 workers.

"The majority of our business is family orientated, but only 30% is passed to the next generation due to difficulties on succession. It is fundamental that business transfers are prepared as early on as possible to ensure the smooth transfer of the family business, safeguarding its continuity throughout successive generations," Cardona said.

It was argued the development of clear and formal family governance structures, family protocols and how the family business is organised and governed played a pivotal role in this regard.

The ministry also launched the website 'economy.gov.mt' offering the opportunity of online public consultation. The consultation process ends on 12^th August.

"Feedback is being sought on difficulties faced by family businesses in preparing for family business transfers, and methods used to tackle these difficulties," the Minister said.

Response is also sought on four key objectives of the Bill, namely the definition of family, definition of a family business, succession and family governance, and incentives for registering as a family business.

The launching of the consultation exercise was done in the presence of several stakeholders, who backed this government's decision.

Chris Cardona concluded that the 'Family Business Act', together with several other promises such as less bureaucracy, reduction of electricity tariffs and the Global Residence Scheme, would all lead to much-needed economic growth.