From our point of view, it is essential in family businesses that the power of decision lies and remains with the family. Generally formulated wishes or regulations often make a large contribution to this, because they ensure that the individual family members place their personal interests permanently behind the interests of the family business.
Such regulations make sense in many areas and usually concern various topics such as values / goals / rules of conduct / conflict management / sanctions / society / fiduciary duties / information rights / family assets / institutions.
This enumeration is exemplary and topics are selected and, above all, weighted differently in families. However, what is always essential is the continued acceptance of these regulations by the family.
Particularly in the case of votes on possible profit distributions, a basic regulation often makes sense because the decision is not subject to short-term interests. It must be clear to the family that the desire of the operating shareholders to leave as much capital as possible in the company is on a par with the desire of the non-operating shareholders (and the foundation’s board of directors) to receive high dividends and take little risk. A prioritization of a viewpoint can be achieved by different voting weights and/or “softer” guidelines, such as preambles or family constitutions.
We often see slight preferences of the operative family members. This is good to a certain extent if it is intended to achieve a high degree of harmony between the interests of management / foundation / family. However, this – like any imbalance – should be done very consciously and regularly checked for its usefulness. Conversely, one should also keep in mind whether the non-operational family members could counteract this distribution of roles. In such situations, a (quasi-)external body – a foundation board, a family council, a court – is often called upon to make decisions.
Family guidelines of a general nature are then decisive, especially in the case of a role of, for example, the foundation’s board of directors as the “tip of the scales” and could provide the non-family decision-maker with essential interpretation aids for the family will and thus provide a basis for decisions.
No less important is the role of family governance regulations for the identification of the entire family with the family business – especially over several generations. If one has a personal connection to the family business that goes beyond anecdotes from one’s grandfather’s life and knows more about what is going on in the company than is written in the newspaper, then it is easier for most people to put their own interests behind those of the company and the family as a whole. Even if only for a limited time. Family governance regulations provide valuable assistance in this regard as well.
