The Family Business Office (FBO) has announced plans for new initiatives to support companies by extending the entity’s services to Gozo, increasing study opportunities in the sector and exploring EU funding, a spokesperson has said.
This follows consultation with a wide range of businesses on how the original legislation – the Family Business Act, ratified in 2017 – could be fine-tuned to cater more specifically to the day-to-day challenges being experienced by family firms.
To this end, the spokesperson confirmed that “a focus on Gozitan businesses will be introduced”, with discussions on opening an FBO branch on the island underway. Moreover, the Office confirmed that it is about to embark on a dialogue with the Faculty of Economics, Management and Accountancy at the University of Malta to offer and develop study units for students to acquire further knowledge in the area by offering “tertiary-level subject options in the specific field of family businesses.”
Collaboration with foreign universities, as well as other entities, is also being planned, the spokesperson said, with the intention of exploring EU funding in relation to knowledge sharing, with the aim of embarking on an ambitious three-year initiative providing additional resources to family businesses across the EU. “During 2019, the FBO is endeavouring to collaborate with Advenio eAcademy (Malta), European Family Business (Belgium), University of Ioannina (Greece) and Vilnius University (Lithuania) to submit a joint application for funding, which will also be submitted for Erasmus+ co-funding,” he said.
The new initiatives will boost the support available to family firms through the FBO and its legislation, the spokesperson underlined, thus adding to the aid already established through the much-used fiscal and governance incentives, as well as the existing tax credits as delineated in the Family Business Act. This is in line with the entity’s drive to “work directly with family businesses, representing them, promoting and working towards new policies and incentives, as well as registering family businesses so that they may benefit from the numerous incentives and schemes available to help them sustain their business and carry out successful business transfer,” the spokesperson said.
Indeed, helping firms plan for the future through strong succession planning is high on the Office’s priority list, and a mission which has taken priority over the past year, made easier through the extension – up until the end of this year – of Legal Notice 131 of 2017, which allows “family businesses to transfer their company to family members and benefit from a reduced stamp duty rate from 5 per cent to 1.5 per cent on the uncapped value of the business.”
This incentive has motivated family firms to think ahead, the spokesperson said, and to make plans to transfer their business to the next generation, allowing them to make “significant savings” and also “encouraging the new generation to step in and the founding generation to plan their succession and retirement, also allowing a smooth inter vivos business transfer.” The scheme has proved to be so popular that “by the end of 2018, over 1,000 people transferred their business to family members, representing one of the largest amounts of business transfers that took place in any one year across Malta and Gozo.”
The Family Business Act is the foundation of such incentives and initiatives, the spokesperson stressed, with companies registered as a family business being encouraged and assisted through the, sometimes, fraught process of planning for the future by giving them an identity and structure. “The legislation regulates family businesses, and, in turn, this encourages and assists them to enhance their internal organisation and structure with the aim of effectively operating the businesses towards succession.”
To this effect, the law “seeks to regulate and establish parameters within which family businesses are to govern and operate, to help them pursue an effective transfer,” and it is also “intended to establish operational benchmarks so that family businesses can further achieve their aims,” the spokesperson outlined.
And, as a result of the FBO’s focus on encouraging “sustainability, longevity and continuity”, the entity has seen a tremendous response from family firms wishing the avail themselves of the benefits enshrined in the legislation. “In the process, the FBO received approximately 2,000 emails requesting assistance and support and registered over 4,600 visits to its newly-set up website,” the spokesperson said. This has enabled the Office to work towards its “aim of providing a platform for family businesses to come together and provide a comprehensive service to family businesses,” he said.
“Through education, incentives and awareness, we may assist those who have been in business for all their life to let go and make space for the new generation. Reluctance to do so is one of the most important factors in the failure of succession in family businesses and needs to be avoided to reduce the risk of the generational shadow,” the spokesperson cautioned.