LAST Saturday, October 17, the Makati Sports Club was filled to capacity for a conversation that many family businesses postpone until it is almost too late: Who will own the family business when the founder is no longer around to decide?
The full house reflected a reality that every business-owning family must confront. Building wealth is difficult. Keeping it within the family, protecting the enterprise, and ensuring fairness across generations can be even harder.
At the heart of our discussion was one critical instrument in the family legacy journey: the Shareholders’ Agreement (SHA).
WHEN INHERITANCE MEETS OWNERSHIP
Many founders assume that because they built the business, they can determine exactly who will eventually own it. But ownership succession is not always that simple.
Across ASEAN, inheritance laws, compulsory heirship rules, marital property regimes, and corporate regulations can affect how shares pass from one generation to the next. The precise rules differ by jurisdiction, but the challenge is universal: a founder’s intentions must be translated into legally sound arrangements before a crisis occurs.
Consider a founder who wants the business to remain under the stewardship of children actively involved in its operations. What happens when shares pass to heirs who have different priorities? What if an heir wants to sell? What happens when marriage, divorce, death, or family disagreements change the ownership landscape?
These are not merely legal questions. They can determine whether the business survives as a cohesive enterprise or becomes fragmented by competing interests.
THE SHA: A CRITICAL PIECE OF THE LEGACY PUZZLE
A well-crafted Shareholders’ Agreement establishes the rules governing ownership and the relationship among shareholders. Depending on the applicable law and the family’s circumstances, it can address share transfers, rights of first refusal, valuation mechanisms, exit arrangements, decision-making, deadlocks, and other potential sources of conflict.
It answers questions families often avoid discussing while everyone is still getting along.
Who may acquire shares? What happens when a shareholder wants out? How will the business be valued? How can the family prevent an ownership dispute from paralysing operations?
An SHA does not replace a will, a Family Constitution, or proper estate planning. Nor can it override mandatory legal rights simply because the family wishes it to. Its provisions must be coordinated with the company’s constitutional documents, applicable inheritance rules, and other relevant legal instruments.
The objective is not to eliminate legitimate rights. It is to establish fair, workable rules that protect the business while respecting the rights of those entitled to inherit.
THIS IS NOT ABOUT BEING ANTI-IN-LAW
One of the most important distinctions in family governance is understanding that protecting a family enterprise does not mean treating spouses or in-laws as adversaries.
They are not the enemy. They are part of the family’s reality, and in many cases, its strength.
The challenge is that marriage, inheritance, and business ownership can intersect in ways the founder never anticipated. A spouse may acquire economic rights or ownership interests depending on applicable law and the family’s circumstances. Those rights deserve to be understood and addressed properly.
The answer is not exclusion or hostility. It is preparation, transparency, and fairness.
Families need to distinguish between protecting the rights of spouses and heirs, preserving family ownership where legally possible, and ensuring that business decisions remain in the hands of people qualified and authorised to make them.
Fairness does not mean that everyone must have the same role. It means that expectations, rights, responsibilities, and boundaries are clearly established.
THE LEGACY JOURNEY MUST START NOW
The full house at Makati Sports Club was a reminder that more families are ready to confront these difficult questions. But awareness is only the beginning.
A legacy journey requires more than a single document. It involves family alignment, a Family Constitution, an effective Family Council, a carefully structured SHA, appropriate estate planning, and the preparation of the next generation for responsible ownership.
Founders should not wait for illness, death, or family conflict to initiate these conversations. By then, the opportunity to shape the discussion may already have passed.
My challenge to every founder is simple: Review your ownership arrangements before your family is forced to test them.
At W+B Family Advisory Group, we help families move from difficult conversations to practical governance and succession arrangements designed for their circumstances.
You spent decades building the business. Give equal attention to protecting its future.
Because a legacy is not measured only by what you leave behind. It is measured by whether the next generation can preserve what you worked so hard to build.
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Prof. Enrique M. Soriano is Executive Director of W+B Family Advisory Group and a Senior Accredited Director of the Singapore Institute of Directors (SID). He advises boards, founders, and multi-generational family enterprises across ASEAN on family governance, succession, and long-term stewardship./PN
