Things to note as an independent director in a family business

Company's interests are central, but keep a close watch on family dynamics, says panel

- Sue-Ann Tan

More than half of the 600 companies listed on the Singapore Exchange (SGX) are family-run businesses.

So how do independent directors sitting on the boards of such companies navigate the complexities it brings, especially when decisions can be made over the dining table and WhatsApp chats rather than the boardroom?

The issues that can arise in family-run businesses were thrust into the spotlight when City Developments Limited (CDL) executive chairman Kwek Leng Beng sued his son Sherman Kwek, who is the property giant's group chief executive officer.

The tussle between father and son for control of CDL came to light on Feb 26 and culminated in the older Mr Kwek dropping the lawsuit, but not before matters such as the appointment of independent directors came under public scrutiny.

These issues were part of a panel discussion, titled When Board Members Disagree - Lessons from Recent Public Disputes, held by the Singapore Institute of Directors on June 25 at the Park Royal Collection Marina Bay hotel.

Panellists shared tips with the directors attending the discussion, ranging from how to discharge their duties responsibly in the face of opposition and knowing when constructive disagreement becomes destructive.

The tips for independent directors are:

BE SENSITIVE TO WHAT IS HAPPENING WITHIN THE FAMILY, OUTSIDE THE BUSINESS

There is definitely some spillover from what happens in the family into the business, said Professor Marleen Dieleman from IMD Business School.