Thursday, 31 December 2009

Gulf sisters get short end of business stick

In some Gulf countries women aren’t allowed to work in specific government jobs or hold senior ranks in public office. In other, more liberal, countries they have become chief executive officers of privately owned businesses and a force to be reckoned with. However, one area where the rights of girls in the business world can be compromised is with regards to inheritance in family businesses.

In the past decade or so many of the Gulf family businesses founders have passed away, and some companies have adapted better than others to the change. Some firms have even prepared for it in advance knowing that the patriarch was in ill health. In too few times did the patriarch lay foundations for his departure and even less have stepped down in their life time to “manage the shift”. In the worst-case scenario, brothers, some of whom can be from different mothers can be bogged down for years on end in court trying to sort out inheritance maters. In other times the male siblings are close and a smooth transition to the second generation of ownership is seen.

However, one side that is almost never highlighted is the issue of female inheritance. While it is very rare for girls to be left out of the inheritance equation altogether, and do receive a share in the vast majority of amicable settlements, sometimes they are not given a choice to inherit equity in the family business and are expected to be settle for an equivalent amount in cash. In other cases a woman’s shares are valued at a specific amount and she is given an asset such as a building or villas of equivalent value and compensated for the difference in value.

It is not uncommon for women to work in the family business, with the exception of those who are self-employed, engaged in other work, or choose to be housewives. Sadly, in some cases, even if woman is qualified she may not be allowed to work in a family business while her less qualified brothers are given that opportunity. The logic behind this seems to be that should a girl inherit shares in a company and legally becomes a shareholder, if she is married to someone from outside 'the family' then the shares would go down to the offspring of that couple, who are not seen to be from the 'original' family business.

This may go back to a question of what defines a family. Are one’s nephews from a bother closer to one's nephews from a sister? Does a woman still have 'loyalty' to her family if she is married? These assumptions may seem trivial but they do play a part in the minds of family businesses across the Gulf. In fact, in the next five to ten years it is expected that $500 billion in inheritance will be passed from one generation to the next as the founders pass on. This large amount of money will certainly be a cause to either bring people together or set them apart. And in some cases, the women won’t have a say.

But what can be done to safeguard the inheritance rights of women in the Gulf?

To avoid a situation where the potential male dominance in a family business negatively affects the daughter’s equity, a father can write the shares in his daughters' names during his lifetime. He must make sure that it is done in accordance with the law and have the papers authenticated by the courts. Preferably, the father can employ a lawyer to make sure that his daughter’s rights are safeguarded in case of his departure.

As in the case of young boys, a guardian can be assigned to protect a young girl's inheritance until she has reached adulthood. This guardian will have the right to sign on her behalf but must not be given the right to sell her shares or use them as collateral or sign this authority away to someone else. The father can also create a trust that is based offshore or in one of the more advanced financial free zones in the Gulf such as Dubai, Bahrain or Qatar. Unfortunately, not all Gulf States recognise trusts yet, while some assets can only be owned by a locally registered firm or even in an individual’s name.

The truth is that the mentality of not allowing females to own family business shares is not exclusive to the Gulf. Other regions in the developing world and some in the developed world, also find ways to discriminate against female inheritance. This should not be seen as a matter of gender rights; it is, in reality, a basic human right.

*This article first appeared in Gulf Business magazine, December 2009 issue

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