Majid Al Futtaim, one of Dubai’s biggest private sector conglomerates and the Middle East's largest malls operator, will continue to operate normally as a special judicial committee looks into potential inheritance issues among 10 heirs of its late founder.
"There is a special judicial committee whose role is to adjudicate potential legal disputes related to Mr Majid’s estate and inheritance issues, not to oversee the company or its business,” MAF said in a statement to The National on Monday.
“As we work through this transition, our businesses are continuing their operations as normal.”
The special judicial committee has been set up to oversee the transition period after the passing of Majid Al Futtaim in December. The former bank clerk, who was a visionary entrepreneur, built an empire with $16 billion in global assets around the retail and leisure sectors that are among the main pillars of Dubai’s economy.
“We will make any necessary announcements at the appropriate time,” MAF said. It did not provide details as to why a judicial committee was set up.
It is not “our practice to comment on the personal affairs of our leaders or shareholders”, the company said.
There was speculation on social media about the future of the company and its operations after the Financial Times first reported the government’s intervention on Sunday.
However, Habib Al Mulla, executive chairman at Baker McKenzie Habib Al Mulla in Dubai said there are no disputes among the heirs of the conglomerate.
“Unfortunately, the news took on a more [bigger] dimension than the reality because it was published in a foreign newspaper,” he said in a tweet on Monday.
“So far there are no disputes between the heirs. Appointment of the Judicial Committee [is] due to the presence of inheritance (personal assets) that must be counted, evaluated and distributed to the heirs.”
Family businesses have a long history in the Gulf region and are one of the key pillars of the economy, accounting for a large chunk of the region’s non-oil gross domestic product. Roughly 80 per cent of family businesses in the GCC are at a critical transition phase of being handed over from first to the second generation, or from the second to the third generation, according to a study by the Family Business Council-Gulf (FBCG) and McKinsey.
Given the significance of family businesses to the region's economy, "proactively mitigating against conflict-related risks is very important”, Omar K Alghanim, chairman of the FBCG said in May.
The late Al Futtaim founded MAF in 1992, and in 1995 opened City Centre Deira, the group's flagship mall, which kick-started its growth in the UAE. MAF has helped Dubai – the commercial and trading hub of the Middle East – consolidate its position as a global leisure and tourism destination.
In the 2000s, the MAF portfolio expanded exponentially, with Vox Cinemas, the UAE's first multiplex cinema, opening in 2000. The company currently owns and operates 29 shopping malls, 13 hotels across the Middle East, 378 Carrefour hypermarkets and supermarkets operated through franchise agreements, as well as entertainment and leisure assets.
Its success has been replicated outside the UAE, as it expanded into markets including Saudi Arabia, Egypt, Oman, Bahrain, Lebanon, Kuwait, Qatar, Jordan and Uganda.
Majid Al Futtaim on Monday said its late founder had put “sound governance” in place and its management team will continue to run the company with oversight of its board.
"With a transparent governance structure and robust processes, we assure all our stakeholders that business at Majid Al Futtaim continues to operate normally and in line with our strategic plans,” MAF said.
“The board … and the executive leadership team will continue to be responsible for protecting and growing our shareholders’ interests.”
The conglomerate is privately held but has tapped debt markets through sukuk, or Islamic bonds, and it publishes its financial results. The company has a BBB investment grade rating from Fitch and Standard & Poor's.
In August, Majid Al Futtaim, which is being led by chief executive Alain Bejjani, reported a 2 per cent increase in its first-half earnings amid the region's continued economic recovery.
Earnings before interest, taxes, depreciation and amortisation rose to Dh1.6 billion ($436 million) in the first six months of the year. Net profit after tax for the period stood at Dh662m and its total equity rose marginally, while revenue in the period fell 10 per cent to Dh15.6bn, it said at the time.