The distinction between ownership and management, so critical for the effective running of modern enterprises, is poorly understood by many family companies. If ever there was an issue that validates the old maxim âSomething you donât know can hurt you,â this one is it.
The rights of owners have become increasingly defined in the courts (see âGiving Minority Shareholders Their Due,â Winter 1994), but the perpetuation and health of the company depends not just on respect for legal rights. It turns to a great extent upon a proper understanding by family members of the roles and responsibilities of owners and managers.