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Family and Private Companies

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Corporate governance is as relevant to a Family or Private company as it is to a listed company. Why? Because corporate governance will help the owner run the business professionally and sustainably without diminishing the owner’s control, aspirations or values.

It is a fact that fewer than 15% of Family companies survive to the third generation. A dominant contributory reason for this 85% failure rate is a lack of corporate governance structures and processes and a failure to distinguish the Family from the company.

Corporate governance carries enormous benefits for Family companies such as:
  • Adoption of value creating management structures;
  • Effective risk management properly embedded across the company that identifies and manages business risks;
  • Effective internal control structures that ensure all aspects of the business have an appropriate control (e.g. payments or purchase orders);
  • Elimination of misuse of delegated authority against interests of the owner, manager and other Family members;
  • Transparency on performance against agreed objectives and accountability by Management;
  • A code of ethics/code of conduct which provides rules on how all employees should behave, sets out the values of the company, and promotes the well being of the company and its stakeholders;
  • Enhanced value creation by use of non-Family senior managers with an effective process for recruitment, retention and succession;
  • Value creation by contribution from suitable independent directors or advisory board members to inject strategy, experience and insight;
  • Separating ownership responsibilities from management responsibilities.
Majlis has the expertise to guide Family companies through the many corporate governance challenges they face.

For more information please contact the Corporate Governance Department of Majlis Partners