What are your responsibilities as an owner of a business? We must distinguish ownership from employment in a business. They represent two very different roles. Often in family enterprises, distinguishing between different roles has blurred lines.

The topic today will centre around ownership. We will address some considerations around ownership that a share owner should know and understand.

Governance – for those with voting shares, a vote gives that person the right to vote for the enterprise’s Board of Directors. Votes carry responsibility and the rights associated with votes is often set out in a shareholders’ agreement.

Voting vs equity – a share can have two differing rights, votes and equity entitlement. A share can possess one or both of these rights. The rights of a share are set out in the articles of incorporation of a company.

Dividend policy‎ – a share may have a right and entitlement to dividends. Best practice for family enterprises is to set in advance a policy for payment of dividends, for several reasons:
– to set expectations for dividends in the future and communicate them clearly to family members
– ensure that the company retains sufficient resources for its business objectives

‎All of the above ownership matters are important to consider for owners. The best way includes:

– to begin an ownership education process
– to codify an ownership code of conduct
– to communicate with owners their rights and responsibilities.

When to start? Now.

Learn, think, apply!