It is well known that family businesses struggle to survive beyond the third generation, and this is often as a result of good corporate governance. Good governance is all about implementing systems, procedures, policies and appropriately delegating authority to run a business and to provide mechanisms that promote accountability and transparency of the company. Unlike public companies, who are subject to legislation, corporate governance is not mandatory for privately held companies, and is often overlooked.
However, it is vital that the principles of good corporate governance are also applied to private businesses to protect their long term viability and to add value to their businesses. Implementing corporate governance policies is recommended in order to enhance financial transparency, managerial accountability, and shareholder value.
In relation to public companies, it is the board’s role to ensure that a company is accountable to its owners (the shareholders). Corporate governance, however, encompasses much more than the traditional notions of shareholder rights. Corporate governance includes rights of various stakeholders of a company, including investors, financial institutions, customers, suppliers, employees and the community.
In addition, for a family business the following should be considered:
- Family Councils (read more)
- “professionalizing” the family business (read more)
- appointment of independent directors to family business boards (read more)
- rules and performance of board of directors (read more)
- risk management and internal controls (read more)
Our Corporate Governance Service
Creating and maintaining corporate governance policies for your company will ensure it runs as efficiently as possible and can make your company more attractive in a potential sale or merger, as well as preparing it to go public.
Taking the initiative to adopt governance practices will improve the confidence of stakeholders and brand reputation. It also benefits the organisation in terms of its succession plan and makes the business a more attractive proposition to a potential purchaser.
FBCN can assist private businesses educate and train board members and develop and implement sound governance systems tailored to fit their businesses to facilitate their long term success and survival.
Read more about what we offer or contact us for an obligation free consultation.