A family business is a business in which two or more family members have a significant ownership interest and control over the business. The family business succession plan is the key planning for the business to sustain in generations. It is estimated that 90% of family businesses around the world failed to pass to the third generation, like Chinese proverb that says “Wealth does not pass three generations”. There are a variety of reasons why this happens:

  • The founders of the family business either fail or refuse to plan for the succession of the family business;
  • Fragmentation of the family business dons the generations;
  • Family members lack of interest in joining the family business;
  • Family lacks of common family mission or common value.

To solve these issues, you may want to consider to set up Family Business Trust or Family Foundation with Rockwills Trustee Berhad.

The Family Business Trust creates a structure for the continuation of the family business with or without the involvement of the family members. The existence of family participation in the business can strengthen the company because family members are often loyal and dedicated to the family business.

The objectives of setting up the Family Business Trust are:

  • To protect and preserve the family business over multiple generations while keeping the shareholding within family;
  • To provide financial security for the families of the current owners who may or may not be involved in the business;
  • To avoid fragmentation of the company shares due to inheritance;
  • To ensure a smooth transition following the retirement, incapacity or death of a key person; and
  • To achieve the long term health and viability of the business controlled by the family preventing a sale of the business.

Diagram of Family Business Trust