February 13, 2017
From IFC - Family Business Governance Handdbook
Corporate Governance in Family Business
This coming Wednesday, I will be meeting a Board regarding questions on propriety correct way of investment by family members. I and a lawyer will be consulted on the fairness on investment and dividends of family members on the business.
The laws of the land, the civil code, the family code, the Corporation code cant answer the query; even management and MBA stuff cant answer that.
Managing a family owned business is a challenge; managing family relations and managing the business
They say that the first generation builds and grows the business, the 2nd generation enjoys it, the third generation, the nephews and grand children ruins it.
A/ There should be three governing bodies of a family owned business each with varying compositions:
1. Family council - to create and enforce Family constitution which contains
1. Family constitution - enlarging perpetuating the vision mission
1. family members employment
2. share holding
2. Family corporation institution
1. family assembly
2. family council
3. family office
2. The statutory board - to do the regular board meeting responsibility
3 The strategic board plan the future or the company to keep up with the times, and fend off competition
B. FAT principle and corporate governance
C. Succession Planning
Lawyers, judges cant solve the problems of family owned corporation although they are so many may be up to 80% of the total business in the country. Many of them fall by the wayseide because solutions to their problems, mostly about family relations can be solved by the family members themselves. That is why Nene Soriano, Ricky Mercado (under the new Dept at Loyola on Family business) are having a great day consulting family owned business. So too Dr. Ed Morato who bills $2,000 per day