Why family enterprises must move from ‘paper boards’ to real boards

SOME boards look impressive on paper, but they exist more in form than in function.

In many Asean countries, boards in family enterprises are established largely as a matter of compliance to meet regulatory requirements, please external stakeholders, or project sophistication.

Yet beyond the formalities, these “paper boards” lack independence, accountability and authority.

Decision-making remains firmly in the hands of the founder or a small family circle, leaving the board powerless to influence direction.

The problem is not the intention – it is the absence of proper governance foundations.

For as long as family governance is not structured, relationships are not aligned and roles are not clarified, the board will falter.

It becomes ceremonial rather than strategic, reactive rather than forward-looking.

When governance fails

The pattern is strikingly similar across Asean.

In one case involving a multi-generational hospitality and property group, the founder’s children inherited equal ownership after his death. Each saw themselves as a rightful leader.

Dividend disagreements escalated into bitter boardroom disputes. Without a shareholders’ agreement or independent directors, the board could not mediate or decide.

Paralysis set in; the company began selling prime assets just to keep peace in the family.

Another family business faced numerous issues after the children joined, facing entitlement, sibling rivalry, nepotism, and conflicts between the father and his children.

Compounding these issues was the father’s management style, which centralised power and relegated the children to subordinate roles.

Additionally, conflicts intensified due to the involvement of in-laws, who were brought into the business without appropriate qualifications, solely based on familial trust and as a source of inexpensive labour.

The mother’s tendency to side with the entitled children further exacerbated tensions within the family.

In another case, a logistics firm learnt that a family constitution alone could not prevent internal conflict.

After years of stalled decisions and disputes, they activated governance through a family council, a clear shareholders’ agreement, an external board of advisers and governance training for younger members.

Within a year, harmony was restored and the business grew by 25 per cent, proving that real governance begins with implementation, not paperwork.

These experiences have shaped my personal advocacy: to see the transition from paper boards to real boards become a reality.

Too often, family dramas play out in the boardroom – fuelled by the poor quality of directors, unresolved family conflicts, ownership disputes and the absence of a shared purpose.

Without strong governance structures, the board becomes the very stage where these conflicts erupt, rather than the safeguard that contains them.

The four anchors of stewardship

Across the region, such paper boards remain the norm formed out of duty rather than design, habit rather than governance.

To move from paper to real boards, family enterprises must build on four critical governance anchors that strengthen both business and family cohesion, as well as allow boards to move from symbolic to strategic:

• Shareholders’ agreement. It defines the rules of engagement among shareholders, including share transfers, voting rights and dispute resolution. Without it, ownership conflicts quickly turn into boardroom wars.
• Family constitution. This formal document provides a road map for family behaviour and alignment, including succession rules, leadership criteria and the family’s shared values and vision.
• Family council. This serves as the formal forum where family issues are discussed, conflicts are resolved, and family behaviour is regulated before these matters reach the corporate board.
• Code of conduct. It sets standards of accountability and professionalism, ensuring family members and directors adhere to the same principles of stewardship and responsibility.

Building boards that truly govern

When these anchors are in place, the board is no longer just a compliance tool. It becomes a genuine governing body capable of balancing family unity with business sustainability.

In Asean, where many family businesses are transitioning from founder-led leadership to sibling partnerships and cousin consortiums, the pressure to get this right is immense.

If families continue to rely on paper boards, they will remain vulnerable. But if they embrace governance as a discipline and commit to these anchors, their boards can evolve into authentic engines of stewardship protecting not only the business, but also the family legacy across generations.

The choice for family enterprises is stark: Will they settle for paper boards that tick compliance boxes, or will they build real boards capable of steering their future?

The writer is executive director of the Wong + Bernstein Group and serves as an independent director for several publicly listed firms and ultra-high-net-worth family enterprises