Family businesses are the major form of enterprise in India and across the world wherein all key managerial positions are held by family members and family values are ingrained in organization values. There are certain p

Corporate Governance in Family Owned Companies - Provisions in the Companies Act, 2013: Independent Directors and Women Directors: To build up the transparency and accountability of the Board of Directors, the Act now requires at least 1/3rd of the total directors of a listed company to be Independent Directors and have no material or pecuniary relationship with the company or related persons. Unlisted Public companies with paid up share capital of ₹ 10 Crores or more; turnover of ₹ 100 crore or more; aggregate outstanding loans, debentures, and deposits, of ₹ 50 crore or more are statutorily required to have at least 2 directors as Independent Directors. To ensure diversity on the board, all listed companies and non-listed public companies having paid up share capital more than ₹ 100 Crores or more and turn over exceeding ₹ 300 Crores or more are required to have at least one woman director on the board. Corporate Social Responsibility (CSR): Every company having net worth of ₹ 500 Crores or more, turnover exceeding ₹ 1000 Crores or net profit of more than ₹ 5 Crore is required to constitute a Corporate Social Responsibility Committee under Section 135 of the Companies Act, 2013 constituting 3 or more directors with at least 1 Independent Director to formulate policies and recommend activities that the company may undertake for promotion of education, gender equality, health, poverty eradication, environment, employment etc. Again, this measure puts responsibility on the company for the social wellbeing not just of its workforce, but also makes it publicly accountable. Audit Committee of Board: The Act provides for the setting up of an Audit Committee comprising of at least 3 directors by all listed companies, majority of which have to be independent directors. The members of such a committee have to be persons who can read and understand financial statements and the task entrusted to such a committee is recommending remuneration and appointments of auditors and reviewing their independence. Nomination and Remuneration Committee: The Nomination and Remuneration committee shall comprise of 3 or more non-executive directors out of which at least half shall be Independent Directors. Such committee shall identify persons qualified to become directors of the company and make recommendations to the board of directors regarding their appointment and approval. Serious Fraud Investigation Office: Section 211 of the Act provides for the establishment of a Serious Fraud Investigation Office to look into the affairs of the company and investigate incidences of fraud upon receipt of report of the Registrar or inspector or generally in the public interest or request from any Department of Central or State Government.