Submitted to: Ma’am nidhika joshi

submitted by: Adarsh rajawat Monica Sharma Renjit raj Reshma tirthwani Vandana sambhwani

including the founder(s) who intend to pass the business on to their descendants. Family Business constitutes world’s oldest and most dominant form of business organization. . Definition of Family Business: A family business refers to a company where the voting majority is in the hands of the controlling family.  Family Businesses range from small and medium sized companies to large conglomerates that operate in multiple industries and countries.

Succession .Ownership Stage Stage 1: The Founder(s) Dominant Shareholder issues .Estate planning Stage 2: The Sibling Partnership Stage 3: The Cousin Confederation -Maintaining teamwork and harmony -Sustaining family ownership -Succession .Leadership transition .Allocation of corporate capital: dividends. and profit levels .Shareholder liquidity .Family participation and role .Family vision and mission . debt.Family linkage with the business .Family conflict resolution .

Family member Manager Owner Director .

Communicating the rules and decisions that might affect family members’ employment. challenges. mission. aspirations and issues. Keeping family members (especially non-executives) informed about major business accomplishments.    . dividends. and strategic directions. Establishing formal communication channels that allow family members to share their ideas. and other benefits they usually get from the business.Well-Functioning Family Governance Structures aim at:  Communicating the family values. and long term vision to all family members.

   Family council Annual family assemblies/retreat Family constitution/policies .

one to one interactions between family members may give rise to conflicts and hence should be avoided as far as possible.  More beneficial in larger families.  Incase of lack of harmony.  Family and business leaders should not conduct the meetings of family council. .  The family council should meet a few times each year for one or two days each time.  Outside facilitators can be hired in the beginning to kick off the proceedings of family council. Way of operating  The family council should have one member elected per family branch. Family council is to the family what the board of directors is to the business.

family. family beliefs and family philosophies. Managing family business. Family council ensure continuity of family values Developing family creed.Functions of family council  Defining the family vision/mission. Defining roles. Providing for security of family members. Families are primary education institutions. Developing. rights and responsibilities of family members. implementing and mentoring the family strategic plan. Developing agenda for community service and philanthropy. . Drafting and implementing the family constitution/policies. Ensuring rejuvenation through fun.

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responsibility. Authority. Senior management. etc. the family council. Typically defines:   Family values. the education committee.Family Constitution helps formally codify many of the family governance structures. the family office. and the senior management. Key Family Governance Policies (see next)     . Family institutions. the board. and relationship among the family. and vision. including the family assembly. mission statement. Board of directors (and board of advisors if one exists).

  Family Dividend Policy: Establishes guiding principles for family dividend payments to help resolve differing family cash demands.   Family Education Policy: Guidelines for helping family members gain educational and professional training (may include Education fund). Family Employment Policy: Policies should not discriminate or favor family members. Conflict Resolution Policy (and Committee): Describes measures to help resolve conflicts between family members within a defined scope. Must establish atmosphere of fairness and motivation for all employees. Family Director Nomination Policy: Guidelines for electing family members to the company Board of Directors. Family Shareholding Policy: Establishes rules for share ownership and transfer to ensure shares are kept in the family when desired (e..  . Share Redemption Fund).g.

responsibilities. A clear governance structure will make it easier to maintain family cohesion and its members’ interest in the family and business and ensure long-term sustainability!  . The corporate governance structure must clearly define the roles. and senior management. corporate governance responsibility is shared among owners. and interaction between the companies main governing bodies.   Families must set-up adequate structure for the board of directors and senior management. Setting-up a corporate governance structure early will help anticipate and resolve conflicts among family members about business issues. board of directors. The inherent challenges of family businesses can be mitigated by adopting a sound corporate governance structure.   In a family. rights.