The tiny Mediterranean island of Malta looks to be the first country in the European Union to bring in a family business act in an effort to help with potential governance issues and help the sector flourish.
The family business act is currently in a consultation process but is expected to be law by the end of the year. According to the Malta Association of Family Enterprises (MAFE), which helped to initiate the legislation, the new act will create a legal framework in which family members running business will be able to receive guidance and assistance in areas like succession and ownership.
The act will also helped to define who is considered “family” for ownership purposes. It will also look at different classes of shares and how they should be interpreted by the law. Spouse ownership rules are also being looked at. The act also establishes what constitutes a family business in terms of size, ownership, control, decision-making and voting rights.
The act will also gives regulatory powers to the government in the family business arena by helping to determine the definition of family when determining ownership. “The regulator will not only be a licensor but his or her objective should be to bring together professionals and family businesses and to implement fresh initiatives and incentives – both through advancements in the legislation and by building bridges with private partners,” said MAFE.
The success of the act is expected to be looked at closely by other EU states, and could provide a framework for legislation in these countries in the future.