Saudi Family Businesses upon their Founders’ Death

فرضية

2015

Alsaleh, Abdulrahman N. . 2015

This research is intended to heighten the awareness of one of the distinctive facets of law in the Kingdom of Saudi Arabia by a thorough study of applicable inheritance laws that become effective upon the death of a founder or an owner of family business; such an analysis necessarily includes an examination of Sharia Law as that is the governing law of the country.
The significance of Saudi family businesses lies in these businesses’ pivotal roles within and outside the domain of the Saudi market. Approximately 90% of the operating establishments and businesses in Saudi market are conducted by families. Family-controlled firms collectively contribute 50% of non-oil gross domestic product. Beyond the scope of the Saudi market, Saudi family businesses represent 48% of all family businesses in the Middle East. In addition, family businesses, as the heartbeat of the private sector, are the major employers in the Saudi labor market. Eighty percent of total employment in the private sector is provided by family businesses, which renders employees as well the Saudi government concerned about the continuity of these businesses and the job security these businesses provide. These statistics reveal the need to study the position of most family businesses when there is a founder’s death and the subsequent application of Islamic inheritance rules on those family businesses.
The partition process of ownership in a family business usually creates problems and conflicts that find their way into the business management. Such problems often stem from the absence of a strong institutional organization within the family business. 
This study consists of two prongs: the first briefly addresses the Islamic Law of Inheritance and how it became part of the legal body of Saudi Arabia despite the fact that it was not formally enacted by the Saudi legislature. The second prong highlights the business issues that arise as a result of applying the Sharia Inheritance law, and how this affects businesses and their relationships with their counterparts, both domestically and internationally. The goal of this paper is to increase awareness of potential issues when conducting business in the Kingdom of Saudi Arabia, and thus the discussion of Islamic law of inheritance will be limited to the legal attributes and features thereof, and will exclude any religious characteristics, philosophy, and lengthy explications of this literature.
 
 

• نوع عمل المنشور: Master's Degree Thesis
• المدرسة: University of Southern California Gould School of Law