Family Governance

Over 70% of all companies in the Netherlands are family businesses. Family businesses are responsible for 50 % of employment in the Netherlands and generate more than 50 % of the gross domestic product, making them the backbone of society. The future of a family business lies in the hands of the next generation and it is important, also for the economy, that family businesses are maintained. Research shows that the most frequently cited reason for the failure of a family-owned business is not economic circumstances, but that the next generation is insufficiently prepared. Family businesses that are successful in the long term have thought carefully about strategy, policy and succession by the next generation. And family governance helps with that.

Wat is family governance?

Family governance regulates the relationships among family members and between the family and the business. Agreements about aspects such as strategy, policies, internal communication, and family involvement in the company are documented. Additionally, considerations can be made regarding the management of wealth. Effective family governance assists in sustaining the family, the business, and family assets through open discussions and the establishment of structure.

When should I engage family governance?

It’s always a good idea to consider the role and position of the family in relation to the business. However, especially when multiple generations are or will be involved in the business, it becomes important to think about family governance. Family members of different ages, backgrounds, and interests contribute and work within the company, and they need to align in the same direction. Even if family members are not actively involved in the organization, they often hold shares, which also needs to be taken into account. Collective decisions need to be made. By clearly documenting policies and strategies, uncertainties and conflicts can be prevented, and prompt decision-making can be facilitated.

Benefits of family governance

The advantages of family governance are diverse. One can think of, among other things: 

How is this regulated?

First of all, it is advisable to draw up a family statute. This states the mission, values and vision of the family, as well as a policy regarding the family’s relationship with the company. The family’s norms and values affect, for example, the entire business (policy, hiring of employees/directors) and asset planning (investments, philanthropy). It is therefore important to record this properly, so that it is clear not only to the family but also to the management and supervisory bodies. 

Subsequently, one can look at adapting documents that relate to the company itself. For example, does the family want the board to consist solely of family members? Then the articles of association of the legal entity and possibly the shareholders’ agreement and board regulations will have to be amended accordingly. The documents in which family governance can have an effect are, for example: 

  • The articles of association of the legal entities concerned (NV, BV, CV, foundation, etc.) 
  • Conditions of administration (in the case of certification) 
  • Agreements (shareholders’ agreement, certificate holders’ agreement) 
  • Regulations (management board regulations, supervisory board regulations) 
  • Policy documents (succession policy, remuneration policy, investment policy, dividend policy, risk management, media policy) 
  • Family statute 
  • Wills and prenuptial agreements 

What can be regulated?

What direction does the family have in mind for the business? Is the business intended to be sold or continued by the family in the near future? What is the family’s mission and vision? How will all family members be informed? Will family members be actively involved in the business now and in the future? What requirements will be set for the successors, for example education and qualifications? Are or will third parties be admitted to the board? What is the plan for the current family assets? Does the family want to keep it together or distribute it, or perhaps a combination of both, for example to create a study plan? And last but not least, what about philanthropy? 

All questions that are relevant to a family business and to achieving good family governance. 

In short, regulation by means of family governance involves regulating the following, among other things: 

  • Formulating the vision and mission of the family and the family business 
  • Role of the family in the enterprise 
    • Continuation, withdrawal, supervision and succession 
  • Communication between family members, with regard to the company as well as with regard to third parties (media, etc.) 
  • Dispute resolution 
  • Estate planning (investments, dividends, funds to family members (study, purchase of house), philanthropy) 
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Why HVK Stevens?

HVK Stevens understands that family governance is a difficult subject that involves many emotions. The very act of discussing and negotiating within the family is a delicate matter. With an eye for family relationships, we will guide you through the steps to be taken. The specialists at HVK Stevens will draw up a practical arrangement that suits your family and your family business. With our notarial and fiscal background and our extensive experience in national and international asset protection, privacy structures and anonymisation of assets, we oversee the consequences of decisions made by the family for the family members and the business. We are able to inform, to anticipate and, if necessary, to specify these in the required documents. With the combined disciplines of tax advice, legal and the in-house notarial practice and our experience, HVK Stevens is unique in the Netherlands. 

Who are we? 

HVK Stevens Legal, provides legal advice and services to companies, wealthy families and individuals. We do so at both national and international level. We focus on (cross-border) restructuring (mergers, demergers, acquisitions and conversions), private equity (asset protection and privacy structures), setting up funds, corporate governance and employee participation plans. And with our in-house notarial practice we offer a full legal service. 

HVK Stevens Tax, deals with all aspects of (international) tax law, including corporate tax, income tax, payroll tax, VAT, gift and inheritance tax, transfer tax and dividend tax. Our work includes national and international restructuring, business succession, tax incentives for innovation and optimisation of your VAT position. 

At HVK Stevens we have a special focus on entrepreneurs, their businesses, wealthy individuals and families, as well as charities, trusts and foundations. We offer more than advice. We offer a partner with whom you can share your vision. 

For more information, please contact:

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HVK Stevens professionals have legal, tax and financial knowledge and experience

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