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Aweidah: $2.6584 billion the market value of the listing companies in Palestine Stock Exchange PEX as of June the 30th of 2012

2012-07-16

Economy and finance experts pointed out on the negative effects of the Income Tax Act and the current legislative environment for family businesses or companies that might want to convert, assuring on the  inconsistency in both  legislation and it"s procedures, and the importance of having legislation that encourages the family businesses, the necessity to adopt the principle of a gradual conversion and the  political risk compensation to these companies as a result of the conversion, by offering a package of incentives and governmental guarantees. This came during a workshop organized by the Ministry of National Economy, Palestine stock exchange PEX and the Palestinian Governance Institute entitled: "listing in the stock exchange… Benefits and burdens ", In the hall of The Best Eastern Hotel where the General Director of the Institute of governance, Dr. Hisham Awartani headed the dialogue in participation with the : CEO of the PEX Ahmed Aweidah, CEO of Global Sinokrot Group of companies, Mazen Sinokrot, companies controller in the Ministry of national economy, Nizam Ayoub, and the Chairman of Jerusalem Pharmaceutical Company Mohammed Massrougi, in addition to a group of the  private sector and family companies, Palestine stock exchange ,the Capital Market Authority and experts . ..They demanded the necessity of having a special budget to encourage the companies that are on the conversion procedures and stressed the economic dimension in the process of conversion and political risks that generally overwhelmed the work of the Palestinian firms, citing how to deal with risks that prevent the family firms from converting and listing. The Corporate Controller Nizam Ayoub in Ministry of National Economy confirmed on a quest system to strengthen the relationship and partnership with the private sector and develop the legal environment to encourage and attract investment, also with a view to strengthening corporate governance and integrity in view of their impact on the corporate performance. Ayoob pointed out that the vast majority of companies registered in the Ministry of National Economy are family nature, noting that the conversion and listing of these companies contributes to the provision of liquidity and inject new energies and improves administrative capacity and productivity, as the conversion will prevent these companies from collapsing and will protects them from threatened risks and help them get rid of various problems and obstacles, where they can benefit from the advantages offered to the listed companies, hoping that the family businesses will embark on practical steps towards conversion and listing in the stock market due to the benefits to these companies and to the stock market and to the overall national economy.

The CEO of the PEX Ahmad Aweidah, said that the total market value (as on June 30, 2012) is about  $2,658.4 billion, indicating that the market value includes 47 listed companies as on 30/06/2012, while the number of companies hit 48 companies as on 03/07/2012.  Aweidah turned out to the advantages of listing the companies" shares on the PEX, represented by allowing the companies to diversify the sources of funding available to them, since the IPO is cheaper and easier and less risky than borrowing, in addition to giving the company further credibility to work under the umbrella of the supervisory and regulatory to ensure the disclosure and transparency for investors. He also turned out to other advantages of family businesses, represented in: institutionalization, the opportunity of a secondary public offering, the transmission of wealth across generations, better employees, wealth creation in addition to the opportunities for niche company mergers, noting that some approved studies conducted around the world have proved that 65% of the second generation of family businesses fail, and 90% of the third generation of family businesses fail. He also mentioned the fears of the domination of family businesses, asserting that the family does not lose control since the public share may be only 25%, and for taxes: in origin, there should be tax incentives to the public contribution, presumably does not change this topic because of the companies’ listing that continue to provide the same financial data for the taxes.

Aweidah stressed out that family businesses should focus on: their preparation and processing is needed to become public shareholding companies before they become legal for a public company, and focus on the meaning and concept of a public shareholding company rather than the conversion process itself. the CEO of Sinokrot Global Mr. Mazen Sinokrot talked about the general economic situation, pointing out that the economic situation is getting worse in recent years, and the legislation and legal environment is no longer as it was in the past, explaining that the incentive for investment laws became repugnant to the investment, the amendments to the law on Sinokrot income tax act was amended, without reference to the relevant legislative institutions, noting that the issuance of the Investment Promotion Act that was adopted by the President of the Palestinian National Authority, cancels the incentives that are given by the law after a few months of issuance, calling for a legislative policy review and giving reassurance to investors. He also mentioned that the general economic situation is the greatest impediment in front of the Palestinian firms despite of the stock market and private sector effort, adding that the private sector and the stock market trend are moving in different directions, explaining that the PNA did not dare to provide incentives for family businesses to experience the transition to public and listing. As of the Chairman of the Jerusalem Pharmaceutical Company Mohammed Massrougi, he pointed out referring to his experience in the conversion of his family and private company to a public shareholding company in particular and speaking about the beginnings of the company and its foundation and development and growth. He said, the company has turned into a public shareholding company in 1978, while 4 companies that he founded were listed in the PEX in 1997, noting to  the benefits that might derive from the conversion and the movement from the randomness to the organization that may help them to face different challenges . Mr. Massrougi demanded the creation of an efficient administrations that can lead to success, and did not deny that there are problems in many companies with the conversion of the generations, explaining that the principle of conversion and listing cannot be dealt with all companies, but there are companies that can be cured by listing, emphasizing that the best treatment is to find effective ways to keep these companies.

 

 

 

 

 

 


 

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