Empowering Tomorrow: Succession Planning in Family Businesses and Governance for Sustainable Growth

In October, corporate leaders, family business owners, and industry experts gathered at The Chairman's Club, KIPCO Tower in Kuwait for the informative seminar titled "Empowering Tomorrow: Succession Planning in Family Businesses and Governance for Sustainable Growth." Hosted by Fairway Kuwait in collaboration with the Union of Investment Companies, the event provided valuable insights into key governance issues and succession planning strategies essential for the long-term sustainability of businesses in the region.

The morning officially began with a welcome address from Fadwa Darwish from the Union of Investment Companies followed by remarks from Aslam Shareef, Managing Director of Fairway Kuwait. Aslam introduced Fairway Group, which has been established in Kuwait since 2023 and outlined the day’s agenda. He highlighted the critical importance of addressing key issues such as the challenges of succession planning and governance in family-owned businesses, setting the tone for the insightful sessions to follow.

Panel Discussion: Succession Planning and the Next Generation

The highlight of the event was the Panel Discussion led by An Kelles, Director of Jersey Finance GCC, who moderated a thought-provoking conversation around the theme of Succession Planning and Transfer of Wealth to the Next Generation within family businesses in the Middle East.

The panel featured experts from the trust, accountancy, and legal sectors, each bringing unique perspectives on how family businesses can successfully navigate the complexities of leadership succession and wealth transfer. The Key speakers were; Chris Mourant, Associate Director at Fairway Group, Ola Saab, Head of Corporate and Commercial at Al Tamimi & Company and Waleed Abdulfadeel, Tax Director at PwC Kuwait.

Key topics covered included:

• Best practices for engaging the next generation in leadership roles
• Legal frameworks for protecting family wealth during succession
• Common pitfalls in the succession process and how to avoid them
• The evolving role of governance in preparing businesses for generational transitions

Specific insights from the panellists included:

An in-depth overview of how succession planning works in practice. HNWI’s are often very mobile with assets in different jurisdictions. The panel looked at what a holistic approach to succession planning looks like, specifically in relation to structuring international assets as well as GCC assets. Further commentary was provided on the control families can have over the day-to-day decision making and how family charters play a rather large role in the drafting of constitutional documents. Specific mention was given to Shariah-compliant structuring.

Corporate Governance Presentation: Strengthening Board Oversight

Following the panel discussion, attendees gained invaluable insights into the significance of corporate governance in ensuring the long-term success of family businesses. The session, led by Aslam Shareef, MD Fairway Kuwait and David Welford, Parter and Head of Despite Resolution at Ogier delved into the value of robust governance systems in supporting sustainable business growth and transitioning leadership across generations.

The presentation covered critical topics including:

• The structure and responsibilities of independent boards
• Director liabilities and the importance of transparent governance practices
• How good governance can enhance investor confidence and drive sustainable growth

David Welford provided valuable insights through a case study focused on family dispute, highlighting several key themes that emerged from the situation: -

• (i) family disputes can be both costly and emotionally challenging.
• (ii) family dynamics tend to evolve over time, influencing interactions and decisions.
• (iii) informal or ambiguous negotiations can often prove unproductive and exacerbate conflict.

Building on these observations, David emphasised the importance of addressing these issues through proactive planning. In particular, he stressed that careful consideration of generational change can significantly mitigate many of the risks and complications associated with family disputes.

A key point discussed was the role of strong corporate governance in preventing conflicts in the future. While corporate governance may be perceived as an additional expense, it is, in fact, a necessary investment. The costs of failing to implement effective governance structures can be far more detrimental, particularly when considering the long-term preservation and growth of family wealth across generations.