CDL dispute prompts call for family governance disclosures

Transparency could help families pick external directors who can mediate during conflicts.

Regulators should require family-owned companies in Singapore to disclose their governance frameworks to avoid another succession dispute like the one at City Developments Ltd. (CDL), an analyst said.

Disclosures on family governance, which is a “structured approach to managing family dynamics, wealth, and legacy,” could supplement similar requirements in the corporate world, Balagopal Vissa, professor of entrepreneurship and family enterprise at INSEAD, told Singapore Business Review.

“This often involves setting up a family constitution, which specifies family vision, mission, values, and policies regulating how family members affiliate with businesses,” he said in an emailed reply to questions.

Family governance also takes into account processes such as family meetings and councils, succession rules, and dispute resolution rules, Vissa said.

A leadership rift emerged at one of Singapore's richest families in February after CDL Chairman Kwek Leng Beng moved to oust his son, CEO Sherman Kwek, over investment missteps in China. The two later reconciled and committed to working together with the board.

The dispute led to fresh scrutiny of governance and succession in family-run businesses.

READ MORE: CDL Chairman defends governance amid legal dispute

Vissa said disclosing family governance frameworks could guide independent director appointments, adding that people with professional rather than personal ties with the family are better suited to help when conflicts arise.

Ellyn Tan, a partner at Forvis Mazars and a licensed insolvency practitioner in Singapore, said independent directors in family companies should have strong mediation skills and the judgement to involve outsiders when needed.

Third-party professionals could help bring objectivity to the subjective process of succession, which is often “clouded” by bias and personal preferences, she pointed out.

Tan said these professionals often use a process called “visioning,” which has been effective in helping intergenerational businesses align their goals. Visioning lets family members involved in the business share their ambitions and expectations.

Vissa said family-owned companies that have become bigger and more complex should hire professional managers. “Every family, particularly older ones, needs to assess whether the availability of leadership talent within the family matches the needs of the business.”

If family management is preferred, tough questions should be asked, including how family CEOs are assessed, what promotion criteria apply to family executives, and how to avoid fabricated victories, Vissa said.

“Perhaps this is the right time for business families to think more broadly about succession,” he added.

Succession by birthright is no longer the norm, Tan said, adding that it has to be based on merit.

Vissa said passing the business to the next generation is common, but long-term success requires more than continuity — it calls for a renewed entrepreneurial spirit.

“Over time, families often shift from risk-taking and business creation to asset management, gradually losing the founder mindset that once defined their success,” he said.

“Rekindling the founder mindset in the next generation is perhaps important; in today’s world, it is also much more feasible,” he added.