The Family Business Act : perception gap?

Abstract

The Maltese government, through its Family Business Act White Paper, will be the first government within the EU to develop and enforce such legislation. The major issue with regards to family businesses is continuity, which is prompted as the business is transferred from one generation to the other. Hence, this proposed legislation aims to aid family businesses through various incentives in order to promote and facilitate succession and governance. Such legislation was developed and formalised through the input and influence of various entities. The Maltese government has organised various seminars and meetings with numerous organisations and individuals to identify and understand better family businesses. Furthermore, the Maltese government has also carried out independent studies through third party organisations in order to gather reliable and current information. The findings and results of such studies are not available to the public as yet, hence one may be prompted to ask how the provisions and incentives of such legislation were actually derived, whether family businesses are truly aware of such an impending legislation, and whether they are aware as to how it will affect their organisation and internal structure. Hence the aim and purpose of this study is to identify, if any, the Perception Gap between what this proposed legislation aims to achieve and what Maltese family businesses are expecting from such a legislation. This will be further enhanced by exploring the challenges that family businesses face both at a local level and within the EU. Such legislation will inevitably bring about a change within the internal structure of some family firms that would want to register with such a law. The data collected for this study was achieved through semi structured interviews, carried out with various service providers and legislators. The experiences and contributions that such entities divulged, with regards to the legislation and family businesses alike, are imperative to this research study. Furthermore, in order to complement the comments of service providers and legislators, another handful of interviews were carried out with family businesses. Through the interviews carried out, it became evident that this proposed legislation has already made a profound impact by promoting awareness with regards to succession and governance. The various challenges that are faced by family businesses are consistent with what recent statistics and studies have been reporting. Family businesses are different from other types of businesses due to the family unit being an important factor, which brings with it additional variables within a business. This ultimately affects the business as a whole and enhances the eventuality of dismantling the business. Moreover, the role and contribution of non-family members is fundamental to the evolution of family businesses.