There are various corporate governance codes and guidelines that family businesses may want to adapt for their own needs:
The Wates Principles, published by the UK Financial Reporting Council as a corporate governance code for larger private companies
Corporate Governance Guidance and Principles for Unlisted Companies in Europe, published by the European Confederation of Directors’ Associations (ecoDa)
The Family Business Governance Handbook, published by The International Finance Corporation
Or, you might prefer informal governance in the family business boardroom that is based on relationships of kinship, loyalty and trust.
Whatever your preference, effective corporate governance in a family business should clarify the balance of power between the board and the owners. In a private company, owners often want to influence some decisions that matter to them for economic reasons or because they are otherwise sensitive for the owners.
Internal governance of the boardroom should cover the following:
The desired balance between family and non-family directors and between executive and non-executive directors.
How directors are appointed.
Style of leadership in the boardroom.
How decisions are made.
How directors are incentivised and held accountable.
Other possible controls, such as separate board committees to govern areas like remuneration and board nominations.