Understanding the Differences Among Family Governance Forums
December 30, 2015
What is a family council and how does it differ from a family assembly or a family meeting? To help answer that question, below are brief definitions adapted from The Family Council Handbook that provide distictions among the different types of meeting forums.
Family Business Meetings
Family meetings are used when a family first begins to organize itself to share information and make decisions or plans. It meets 1-2x year to create a learning culture with regard to business, family and owner interactions and to develop group communication and decision-making skills.
A family council is more formal than family business meetings, but the two share similarities in purpose and effect on the family and the business. Many business families have family councils that include the entire family until the family becomes too large (20 to 30 adults) for everyone to be on the family council; then the family forms a representative family council to work for and represent the larger group of shareholders.
This is a large family gathering for the purpose of getting everyone together to promote continuity and unity of the family. It is a forum for their family council to report its progress. Planned programs and activities teach values and culture to a growing family (including the youngest children) to continue the positive influence their values have had on the business.
A family association has a defined membership and is more exclusive than a family assembly. Members can vote and make decisions and often elect members of the family council.
This group typically includes the senior family members who control the majority of the stock or are appointed to represent a large family shareholder group. A common purpose is to communicate and coordinate estate plans so that the business is not hindered by conflicting structures. Also helps family members be on the same page when representing themselves to the board.
A family reunion is just that! It has no business purpose, but serves only to reunite the family, strengthen relationships and introduce remote or new family members to each other.
Executive Council or Executive Committee
A regular meeting consisting of just the family members who work in the business who may or may not be in the senior management team. Executive committees typically include two generations and their purpose is to educate the younger generation and facilitate communication between the two.
These meetings usually occur once a year and including only the family members who own shares. They elect the board, review the past year’s business performance and conduct other business consistent with the corporate bylaws such as approving significant acquisitions or divestitures.
For more information, read The Family Council Handbook: How to Create, Run, and Maintain a Successful Family Business Council by Christopher Eckrich and Stephen McClure. (pp. 323-327). New York, NY: Palgrave Macmillan.
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