Ocorian, a specialist global provider of services to high net worth individuals and family offices, looks at how changes in local and international regulation, tax regimes and new legislation are reshaping family office operations across the region. 

Family offices across the Middle East are restructuring and diversifying in response to local and international regulatory, tax and law changes, according to Ocorian.

The firm, which works with more than 60 family offices around the world, said it is seeing strong growth across the Middle East in general, and the United Arab Emirates in particular, with significant families deciding to onboard.

“Major changes include new local Kingdom of Saudi Arabia companies’ law aimed at modernising and simplifying the corporate code, increasing flexibility, and attracting inward investment,” the firm continued. Global initiatives such as global minimum taxation, and amendments to the Proceeds of Crime legislation are also having an impact.

“Along with changes in UAE corporate tax and the implementation of Global Minimum Standards, the focus is increasing on improving governance at family offices and ensuring they are compliant with regulation,” Ocorian said this week in a statement.

The response among family offices across the region includes family businesses increasingly separating business and personal assets, both domestically and internationally as well as reducing complex layers of special purpose vehicles (SPVs) in multi-jurisdictional structures, the firm added.

Businesses are seeking to diversify local investments using UAE foundations and international investments using new institutional style structures such as private funds and cell companies to optimise their investment strategies.

Some institutional and family-owned structures are migrating to top-tier jurisdictions such as Jersey and Guernsey due to concerns over reputation, their ability to attract joint venture investors, and access financial services, the firm continued.

Ocorian advises families in the Middle East that are considering setting up family offices to use the expertise of lawyers and financial advisors. “Families also need to decide between a fully-fledged or virtual family office and consider incorporating holding entities or foundations. Where family members and assets are based is another key consideration influencing the decision on the location of the family office and how it is managed,” the firm added.

“In the Middle East, family businesses are being driven to adopt stronger governance practices, professionalise operations, simplify structures and address family governance issues. This is crucial for ensuring the long-term sustainability, stability, and success of these businesses in the region,” Lynda O’Mahoney, global head of business development – private client at Ocorian, said.

“Families are conducting assessments of their current situation regarding local and international assets, investments, and businesses. These assessments are shedding light on long-standing issues that require attention,” she added.

“Traditionally, family offices in the region have operated with a single decision-maker structure and viewed generational wealth as inherited, leading to a conservative mindset of maintaining the business legacy and core values. However, with the increasing involvement of third and fourth-generation family members, there is a greater openness to diversification and non-traditional investment strategies,” O’Mahoney said.

Ocorian has published a report from an international study with more than 130 family office professionals responsible for around $62.425 billion assets under management which included 30 respondents based in the Middle East. The report looks at the role of third-party providers now and in the future, as well as the factors that are likely to contribute to the evolution of the family office ecosystem.