Navigating Corporate Governance in a Family Business

Recent headlines encapsulate the tension between decisions made according to the family business agenda and those obligations which begin on incorporation and intensify with growth. To family firm owners this is an ever evolving scale and begs the question: at what point do the interests of external stakeholders take primacy? Section 172 of the Companies Act 2006 creates a legal duty that as a director I promote the success of the company for the benefit of its members as a whole, whilst also taking heed of any long-term consequences of decisions and the impact on the interests of other stakeholders such as employees, suppliers, customers and communities. However, for family owned and managed businesses, this obligation may at times conflict with those interests of the family – take, for example, the hiring of a family member who might not have the requisite skills to fulfil their job.