The Importance of Corporate Governance for Business Success

In this month's Wealth Planning Insights, William Heuseler, Global Head of Wealth Planning, addresses a crucial yet often overlooked aspect of estate planning: corporate governance, especially vital for families with operational businesses.

Corporate governance represents a set of practices and principles that regulate the relationship between the companies, shareholders, and employees, ensuring ethical and transparent action.

Below, find a summary of what is explained in the video:

• Importance of Corporate Governance: Corporate governance is crucial for families with operational businesses, establishing practices, principles, and rules for an ethical, transparent, and trustworthy relationship between the company, shareholders, employees, and other stakeholders.
• Corporate Governance Instruments: The Shareholders' Agreement is highlighted as a fundamental instrument, applicable in Corporations as well as, with reservations, in Limited Liability Companies, to establish norms of coexistence among partners.
• Common Clauses in the Shareholders' Agreement:
• Specifics for Family Businesses: In family businesses, the Shareholders' Agreement is even more crucial to prevent personal conflicts from impacting company management.
• Difference Between Shareholders' Agreement and Fundamental Documents: The Shareholders' Agreement complements, but does not replace, the Company's Articles of Association or Bylaws, which are essential documents defining the basic rules of management and operation.
• Internal Governance Mechanisms: Beyond legal instruments, the implementation of social committees and the drafting of specific policies and procedures are recommended to enhance corporate governance.
• Importance of Legal Consulting: The support of specialized professionals is essential for drafting governance documents, aiming to reduce risks and clarify assumed obligations.

Watch the full video below: