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Abu Dhabi: The Companies Committee, a joint entity of the Ministry of Economy and the Emirates Securities and Commodities Authority (Esca), last week approved the conversion of Al Yousuf Motors, a UAE family business, to a public listed company.
Al Yousuf Motors is one of the affiliates of Al Yousuf Group owned by Yousuf Habib Al Yousuf family, and specialises in transport and spare parts trading.
"According to an exceptional amendment to the companies law, a single article has been introduced last year, allowing any family business to float a minimum of 30 per cent as a requirement for converting to a public company," Ahmad Ali Al Hosani, director of the companies department at the ministry told Gulf News.
The prevailing companies law requires the flotation of 55 per cent for any company wishing to become public, and the amendment came in response to the reservations made by family businesses who feared allowing outsiders to hold a controlling stake in their companies.
The committee approved the value of the company at Dh1.5 billion, representing the value of the paid up capital, of which 30 per cent will be introduced through an initial public offering (IPO) to be completed before year-end, offering the public a stake of the sole agent for General Motors in Dubai and the northern emirates. "This is the first time that a family business is converting to public according to the new amendment, and will be a precedent to be followed by many to come," said Reda Hamad, managing editor of Al Mal Business Weekly which reported the news.
"Family businesses throughout the Gulf are suffering from third and fourth generation disintegration, and the amendment provides a safety valve by securing the necessary finance without giving up a controlling stake," he added.
Several listed companies were floating much less than the required 55 per cent before the introduction of the new amendment, but are mostly government owned, such as Abu Dhabi National Energy Company (Taqa) which floats only 10 per cent, and the National Bank of Abu Dhabi, which lists about 30 per cent of its shares.
"Family businesses account for more than 90 per cent of the commercial activities in the UAE, and have achieved remarkable progress in the corporate structure, and the stock markets offer them invaluable financial resources necessary for expansion," Hamad explained.
Public listing is expected to introduce more transparency and better governance to the corporate culture of the UAE's family businesses, securing more confidence among investors, while adding a very important aspect to the diversity of listed companies.
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