The concept of family offices has proven successful in the global family owned business environment. In the UAE, as per the regulations of Dubai International Financial Centre (DIFC), family businesses have been encouraged to establish Single Family Offices (SFOs) at DIFC.
What Is A Single Family Office?
A single-family office is an organizational structure that manages the financial and personal affairs of one wealthy family. Because a single-family office is driven purely by the needs and preferences of the underlying family, there is no standard for how one should be structured. For instance, some single-family offices are lean enterprises that focus exclusively on investing with a skeleton staff while others are robust organizations with in-house staff, numerous vendor relationships and a broad platform of services. This disparity means it’s difficult to establish hard-and-fast criteria for how a single-family office should be defined other than its dedication to a sole family.
Due to these wide variations numerous challenges may also arise relating to transition from one generation to the next. The dynamics of family-owned business may also include such factors as:
- How should we manage succession from one generation to the next?
- How do we professionalize our business for growth without losing the family spirit and values?
- Should we create a family office to manage the family interests?
- What is the best way to share rewards for family and non-family members?
- Can we attract a CEO who is a non-family member?
- How do we draw the line between ownership and management?
With the boom in private wealth creation – especially at the very high end – there’s a corresponding explosion in the number of single-family offices. The main appeal of single-family offices for the ultra-wealthy is control. The founders of single-family offices are able to create the organization that they see best meeting the needs, wants, and preferences of the individual and the family.
Consultants at Azhari Legal Consultancy provide reliable professional assistance for setting up single family offices at the DIFC.
DIFC Regulation for Single Family Offices
The DIFC Single Family Office (SFO) regulations specifically address the needs of family-run institutions and create a platform for wealthy families to set up holding companies at DIFC to manage private family wealth and family structures anywhere in the world.
Family offices have become highly significant on the global economic landscape. In the Middle East, where family-run businesses make up more than 75 per cent of firms and have total assets in excess of $1 trillion (Dh3.67trn), the need for a specialized legal framework is acute.
In contrast to conventional financial institutions, Single Family Offices (SFOs) have no direct public liability as all their shareholders are bloodline descendants of a common ancestor. As such, their regulatory requirements differ significantly. By establishing such regulations, DIFC has become a hub for local, regional and international family offices.
The regulations follow the establishment of the DIFC Family Office initiative, which provides comprehensive infrastructure solutions for families and family businesses operating in the region.
The DIFC Family Office initiative is aimed at promoting DIFC as an ideal location for family offices.
Azhari Legal Consultancy’s Assistance
We help family-owned businesses address following challenges:
- vision and strategy development
- governance and organizational structure
- succession planning and founder plan
- transference of the family ‘goodwill’*
- leadership development
- reward strategies
- talent management
* Family goodwill is the relational, human and social capital that typically contributes to the economic value of the business.
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