Nata
RESPONSIBLE SHAREHOLDERS = GOOD GOVERNANCE NATALIE McVEIGH
When you think of family business governance, you may think Board of Directors or a Family Council. Both bodies are important and serve a constituent group in the 3-circle model i.e. family and enterprise, but there is another body that we tend to spend less time talking about and/or preparing heirs for leadership in. This body is no less important and it could be argued is more important as the Board of Directors works for them, the shareholders. Forgetting the shareholder group can be for understandable reasons such as shares (stock) are passed as a tax strategy, given at birth, are put away in a trust, or in some cases there are so many shareholders it is not clear who they are. For many family companies, shareholders that only benefit from dividends works for a period of time, however, being a shareholder means much more than getting a nominal (or significant) financial return on the business you own. Shareholders who are not educated, engaged and informed do not stay shareholders for the long haul. So how do we ensure that your shareholders are responsible? It might be helpful to start with broad strokes regarding what shareholders do. Shareholders own the company and are responsible for approving changes that will impact the organisation overall such as electing or removing directors, fundamental changes in the by-laws, mergers & acquisitions, changes in the capital structure, and large culture change i.e. changing company name. This does not mean shareholders, as owners, set the strategic vison for the company (the Board does that) or get into day-to-day operations (the management does that). But they do influence through oversight the large issues that affect the company. Talking about responsible shareholders involves a conversation about shareholder rights and responsibilities.
47 PROFESSIONAL INSIGHT
