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What Do "Owners' Councils" Do?

Larger families eventually need a forum or a leadership process to discuss, develop and communicate the roles and responsibilities of ownership. They develop "Owners Councils" to represent the shareholders, especially when the definitions of family and shareholders are somewhat different from one another.

Theres no greater competitive advantage than a united, committed ownership that speaks clearly, with one voice, to management and the board. To do so, owners need to come together to discuss their role. There are three key roles of an "Owners' Council":

  • Forge the owners' goals, vision and values for the enterprise. The vision includes the owners' views on family ownership and the role they hope family can play in the business. The goals include positions on growth, profitability, risk and liquidity.
  • Design the governance system. Owners must determine the size, make up and charter of the board. They must also define the relationships among the board and the owners and the management. Part of the governance system is to decide how owners can be helpful to management and to regulate the owners' behavior that affects the business.
  • Plan for ownership continuity. It's the owners' responsibility to assure that the estate plans and share transfer plans assure that the vision and goals can be realized into the future. Owners need to agree on their plans and need to understand each others' plans.

After all of these plans and goals and philosophies are written in an "Owners' Manual," we recommend that owners meet once a year to review, revise or reaffirm these roles. A second owners' meeting per year can be appropriate to discharge typical shareholder duties (i.e., elect directors, approve dividends and auditors, etc.) and to hear management reports on the last year's financial performance.

 

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