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SPECIALTIES
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Those not involved in the day-to-day running of the business get a voice in the Family Council meetings.

Family Councils

We help family businesses define, understand, and run their Family Council, and the Ownerships' Forum. If necessary, we also help design the Board of Directors.

Whenever there are several members of the family holding stock of the business, whether they actively work in the company or not, it is highly recommended to establish a Family Council. The members in the Family Council are all family stockholders and their spouses.

Why is the governance structure of family businesses
so much more complex?

Unlike public companies, the leadership of family businesses must manage the interpersonal relationships in addition to managing the business. Furthermore, in principle, the governance structures of a family business is more complex than a public company because it has three (rather than two) governing structures. These are the Family Council, the Shareholder's Forum (with shareholders that may be both family members and non-family executives and investors), and the Board of Directors. As the chart below shows, there is always some overlap in the membership of each structure.

[CHART]

Do members of the Family Council tell me how to run my business?

No! They do not. Members of the Family Council do not interfere in the running of the business. They only serve in an advisory capacity. They present their expectations from the business and try to get consensus.

So, what are the issues that members of the family council can decide?

Actually, when one establishes a Family Council, all its members must first agree what the issues are that the Council should discuss. Such an agreement must be by consensus. Any subsequent change of the initial agreement requires a consensus. The following are typical basic issues addressed by most Family Councils:

  • Hear an annual review of the financial and operational performance
    of the business,
  • Review of future plans.
  • Discuss and articulate the values and principles that must guide
    the business.
  • Review the legacy issue: Which aspect of the legacy should continue and which could be dispensed with.
  • Express their financial expectations from the business and review
    them in view of the business performance and growth plans.
  • Articulate why is it important for each member, to continue as a
    family business.
  • Discuss the contribution of the business to society: Its philanthropic
    and charitable focus.

Family Councils meet annually or whenever an important issue in the business arises.

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