Family Business Governance: Differentiating Board, Shareholder, and Council Meetings

When you’re leading a family business, it’s important to consistently balance the needs of the organization with the needs, intentions, and vision of the family.

That’s why it’s so important to host a series of regular family meetings designed to keep the entire family apprised of business developments and how they affect family members – regardless of whether they’re involved in day-to-day operations of the business.

These meetings allow you to proactively avoid conflicts and misunderstandings happening with the family and the business.

Here are the basic types of family meetings that help keep everything running smoothly:

  • Board meetings
  • Shareholder meetings
  • Family council meetings
  • Special meetings

Whether or not you need all these meetings depends on the size of your business, the number of generations involved, and the complexity of your enterprise.

Now let’s look at how each of these meetings can serve your business and your family.

Board meetings

Board meetings are designed to help your board of directors oversee the management and governance of your business, foster information-sharing, and provide both stability and continuity in times of conflict. These meetings typically occur on a quarterly basis, and they include all members of your board of directors – those from inside and outside of the family.

Keep in mind that the sole purpose of this board is to create value for company shareholders. In fact, the board of directors is hired or appointed by your family business shareholders, and your board serves your shareholders by overseeing business value growth strategies and protecting the interests of the business.

During a regular board meeting, your directors can develop overarching strategy, make significant business decisions, and finalize and/or approve important company policies.

In other words, quarterly meetings create the environment for your board to do its important work. They also charge your board with evaluating the business’ quarterly financial performance against stated goals.

During your quarterly board meetings, your board of directors should vote on major decisions so that initiatives and solutions are supported by either a majority of the board or unanimously, depending on how you’ve set standards.

Shareholder meetings

Shareholder meetings typically happen once a year and involve all voting shareholders in your family business.

During this meeting, your shareholders will hear reports from company leadership regarding the state of the family business and the future direction in which the business is headed.

This is usually also the time when shareholders may appoint or reappoint board members and set up various committees.

For a family business, we find that quarterly board meetings and annual shareholder meetings are similar and may involve many of the same people.

Family council meetings

A family council is a governance body unique to family businesses. A family council typically convenes once a year.

We’ve found that many families like to combine their family council meetings with a family reunion or extended family vacation. It often helps the business discussion for the family to have some fun together as part of the council meeting. If you can meet in a novel setting, all the better. This kind of relationship-oriented interaction with the family helps strengthen the social connections that are so important for your family’s success.

In any case, a family council meeting may run anywhere from a half-day session to a few days, depending on the complexity of the business and the needs of the family.

Having the family all together like this represents an ideal opportunity for the family business leader to bring everyone up-to-speed on recent developments, financial performance, and the overall well-being of the family business.

A family council meeting is also a good time to discuss proposed strategic direction for the future.

Many families find success using their family council meetings as a time for professional development. This allows all generations involved in the family business to learn together and from one another. This is an ideal time for younger generations to learn more about what it means to be a shareholder in the family business.

If you’re leading family council meetings, you also can ask for agenda item suggestions from those who will attend. That way, you’re making sure family members have an opportunity to ask questions and find out more about aspects of the business that are most meaningful for them.

Special meetings

Special meetings are exactly what they sound like – they are a response to circumstances that were unforeseen and/or beyond your control, and they often pop up unexpectedly.

Special meetings allow you and your family to address issues that need immediate attention or that perhaps need more consideration and discussion than routine board or annual meetings will allow.

You might need to call a special meeting to discuss a major life event within the family, or a major business development opportunity.

Putting an appropriate meeting cadence in place is vital for the long-term success and prosperity of your family business.

If you’d like some help putting this kind of schedule in place, our experienced advisors at Ferguson Alliance would love to help. Reach out today to schedule a consultation call.

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