Board of Directors: The importance of good corporate governance in family run businesses by Mukul Gulati
Providing guidance to entrepreneurs and family run business owners, Mukul Gulati, Managing Partner, Zephyr Peacock, writes, “While private companies are not required by law to appoint independent directors, management teams of ambitious young companies should consider constituting a Board of Directors that include a combination of executive, non-executive and independent directors.”
Click here to read the full article on ‘Economic Times’
Below is an excerpt from the post which first appeared on Economic Times on 1 August 2020:
Good corporate governance can help improve accountability, business performance, employee retention and shareholder value. Good governance practices can help both large publicly listed companies as well as family run businesses.
Governance of an enterprise encompasses several aspects such as the composition and role of the Board of directors, decision making process, oversight of management, compliance and compensation practices.
Good governance practices and management accountability are easier to establish at professionally run businesses. Boards of such companies generally have seasoned directors and management teams are experienced in facilitating constructive engagement with Board members. Promoter driven or family businesses often struggle in this area and an experienced, and independent Board of directors can make a meaningful difference to the long-term trajectory of such businesses.
Independent directors are critical to good governance. While private companies are not required by law to appoint independent directors, management teams of ambitious young companies should consider constituting a Board of Directors that include a combination of executive, non-executive and independent directors.
