Business Succession Planning in Asia

I recently blogged about the battle among Stanley Ho’s family members over his stake in a casino empire. This situation is very common in Asian countries for a few reasons: around 70% of listed companies are controlled by their founders or family members of the founders; many older Asians fear that drafting a will might be a bad omen, and they keep control until the very end; the second generation often has very different views from the first generation after traveling to the West for education; and the Asian rule is to treat everyone equally, which leads to many internal conflicts when applied to a business context.

These families shouldn’t postpone business succession planning, and one relatively new way Asians are tackling the succession issue is by establishing a family council. The family counsel includes members involved in the business and some who aren’t. With outside help, the family counsel devises a family constitution, or charter. This charter sets out formal rules for the number of times the family will meet, meeting procedures that ensure good communication, how the council makes decisions and votes, and whether there will be an advisory board of nonfamily members.

See Sonia Kolesnikov-Jessop, Business Dynasties Need to Plan for the Delicate Task of Succession, N.Y. Times, Mar. 28, 2011.

Special thanks to Jim Hillhouse (WealthCounsel) for bringing this to my attention.