Though family-controlled companies account for about two-thirds of the European economy, they receive little guidance when it comes to their corporate governance needs. That’s the conclusion of a group of Spanish researchers, who published a report, Guide to Good Governance in Family Business, earlier this year.
A large part of the 60-page guide, developed by the Family Business Institute, the Foundation for Financial Studies and IESE business school, describes “the need to apply good governance not only to the company, but also to the family.” That, in theory, should come by way of the “council,” a kind of board of directors for family members that formalises the family’s interaction with the company and forms a key component of their governance, says Josep Tàpies, a professor at IESE.
The problem is that many family-run companies have been getting by without these councils, or if they do have one in place, they’re often simple talking shops, says Daniela Montemerlo, a professor at the Bocconi School of Management in Milan and author of a new book, The Family Constitution. In addition to discussing business issues, these councils can be used to draft formal articles of association that deal with sticky areas like the procedure for share transfers and whether in-laws can become owners.
See full Article.
Also see Principles and Practices of Good Governance in Family Business, at IESE.
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