Director Independence on Family Business Boards FAQ
In brief: Family businesses traditionally tend to favor boards composed entirely of family members and, therefore, company insiders. However, independent directors can be a valuable addition to a family company's board due to their professional expertise and ability to offer fresh and objective thinking. This memo addresses the advantages of incorporating independent directors into family business boards, how to respond to objections to changes on the board, the process for adding independent directors, and the related fiduciary duties of family business directors.
This resource can help your board to
- discuss the advantages of adding independent directors to the board;
- determine when to add independent directors to the board, according to the company's development stage; and
- understand the fiduciary duties of directors on a family business board.
Most relevant audiences: family business board members