Family-Owned companies in Fiji are a crucial piece of society and the country’s corporate landscape. This can be a good thing as family businesses have long been the engine of growth for economies around the world.
However, family businesses often have short life spans. To ensure family businesses survive, it is important that the principles of family governance become part of the discussion around dinner tables in Fiji.
These principles include putting in place sound corporate governance structures, including a well-structured board, a professional management team, sound control functions, and proper shareholder and disclosure practices. In addition, ways to manage potential challenges within the family, such as family decision-making, shareholding, employment, succession planning, and disputes, also need to be introduced.
As Fiji continues to grow and integrate itself with international markets, the number of foreign investors seeking good business partners in the country will rise. Investors will not only look at the governance of the business but also at the founding family’s role in it: What is the background of this family? Where did their money come from? How is the family involved in the business and how will it be involved in the future?
Once a family business brings in outside investors, improving governance practices, particularly in terms of board structure and shareholder practices, will become an imperative. The investors, while placing faith in the family by investing in the first place, will want to ensure that their interests are appropriately balanced with those of the family.
Therefore, family companies seeking to raise capital or bring in outside business partners, particularly foreign ones, should anticipate such changes and begin to take action. Every company is different and will require its own practical approach to governance. Changes should be done at the right pace based on business needs and what works for the company and the family.
Much of this starts with education and awareness. Family firms should understand why governance is so crucial for their business and family as a whole, and learn how to put appropriate practices in place.
Source: Razook, Chris., November 21, 2017, http://www.fijitimes.com/story.aspx?id=424653