What is the role of a statutory board in a family business?
State corporation statutes set forth the duties of corporate boards. For a general description, see Frequently Asked Questions About Governance on this topic. Corporate directors, regardless of ownership, are charged with representing the owners to oversee management and help guide the business to success. However, family businesses have a distinct advantage. Whereas the values and expectations of the owners of a public company are unknowable and must therefore be assumed to be average and conservative, the directors of a family business can know and represent the essential values and expectations of the family. The family, as the body of owners, elects the board, which chooses the CEO, who hires the management team. While the family’s values define the culture of the business, and the family’s vision for the future of the business sets the framework for management’s task, the family must make every effort to let the board and management do their jobs and avoid second-guessing their ac
State corporation statutes set forth the duties of corporate boards. For a general description, see Frequently Asked Questions About Governanceon this topic. Corporate directors, regardless of ownership, are charged with representing the owners to oversee management and help guide the business to success. However, family businesses have a distinct advantage. Whereas the values and expectations of the owners of a public company are unknowable and must therefore be assumed to be average and conservative, the directors of a family business can know and represent the essential values and expectations of the family. The family, as the body of owners, elects the board, which chooses the CEO, who hires the management team. While the family’s values define the culture of the business, and the family’s vision for the future of the business sets the framework for management’s task, the family must make every effort to let the board and management do their jobs and avoid second-guessing their act
