Becoming a director of a family-farming company can mean an increase in the share of profits and more control with what happens, but it also comes with more responsibility.
Company directors duties, obligations and good governance practice can some-times be overlooked while in the thick of it as a small to medium business owner.
It is not just an issue for those in the agriculture industry - but for all family-owned companies more broadly. A company director owes a fiduciary duty to the company and to the shareholders as whole. On most occasions there are no conflicts emerging from this arrangement but at times it can rear its head. The fiduciary duty that all directors hold is to act in good faith, for a proper purpose and to avoid conflicts of interest.
In a practical sense for those running the family farm this means:
A simple approach when acting as a director, and good way to determine whether to be concered about what is being done, is to ask if how the action might be percieved by another director or a shareholder.
This article was written by Anthony Kelly and was published in The Stock Journal on Thursday 14 June 2018.