Introduction:-

The family business can be simply defined as a business owned by a family. Same like
other business the family business also needs strategic plans and financial plans and other plans
which are needed for a public company. Same like other public business organizations, the
family business strategy also embedded with the special needs of the family such as the financial
and succession planning, the structuring of the company tax and other legal matters related to it.
Same like other business to a board is needed to control the family business. A board can be
defined as group of directors which acts as a representative of the management to run the day to
day activities of the business. In the case of a family business the board members are selected
from the family itself.

What is the role of the boards in corporate ethics and governance in family owned
business?

All successful family has a strong advisory board of directors which are selected by the
members in the family business. This is an essential tool to manage the overall activities of the
family business.

The role of board in corporate ethics & governance of a family business:-

There are two types of boards can be seen in family businesses such as Advisory board
and governing board. So the impotance of the board in corporate ethics of

Advisory Board

Selected by owners
Provides advice
Low compensation
No liability for advice
Verbal agreement
Uninsured
Governing Board

Elected
Provides governance
High compensation
Fiduciary responsibility
Written agreement
Insured by company
Many family companies have a governing board, often made up of family members and/or other
investors. An advisory board provides a way for owners to reach outside this inner circle for a
broad spectrum of knowledge and experience.