Board directors must be mindful of family dynamics in businesses, says panellist
Board directors must be mindful of family dynamics in businesses, says panellist
Source: Business Times
Article Date: 26 Jun 2025
Author: Navene Elangovan
Discussion comes amid heightened scrutiny of board dynamics following recent high-profile disputes.
Independent directors serving on boards of listed family businesses need to be sensitive to power dynamics within the family, and identify the decision-maker in the business, said one academic specialising in family business and strategy.
Although the role of board directors is limited to business matters, family conflicts can spill over into these matters, said Dr Marleen Dieleman from IMD Business School.
She was speaking at a panel organised by the Singapore Institute of Directors titled 'When Board Members Disagree – Lessons from Recent Public Disputes' held at the Park Royal Collection Marina Bay hotel.
The discussion comes amid a heightened scrutiny of board dynamics following high-profile disputes, including the falling out earlier this year between City Developments Ltd (CDL) executive chairman Kwek Leng Beng and his son, group chief executive officer Sherman Kwek, as well as the boardroom conflict at Fu Yu Corp, which led to the resignation of independent directors.
Family-run firms make up more than half of the over 600 companies listed on the Singapore Exchange (SGX), making the role of independent directors in such settings increasingly complex.
Pick your battles
One way to understand who holds the most voting power within the family is by examining the spread of shareholding across its members in the business, said Dr Dieleman.
Fellow panellist Rachel Eng, managing director of law firm Eng and Co, suggested that directors engage with the top-level executives in the company, such as the CEO and chief financial officer, to get more clarity on family disputes and voting patterns. This will ensure that directors are better equipped to make board decisions, she said.
Eng, who has served on various boards, acknowledged that independent directors can come across as disloyal when they disagree with company leadership. She suggested that directors 'choose their battles', especially when pressured by dominant voices in the boardroom. For instance, if directors are being pressured to support an illegal decision, they should step down, noted Eng.
Professor Lawrence Loh, director of the Centre for Governance and Sustainability at the National University of Singapore, said that if board directors are unable to put their dissenting vote on record, they can consider becoming internal whistle-blowers.
He cited the 2011 case where former Olympus CEO Michael Woodford had exposed accounting fraud committed by executives within the company. Alternatively, independent directors may leave the company and 'be a voice from the outside to change the situation', added Prof Loh.
Acting in company's best interest
Ultimately, company directors must always act in the best interest of the company, even if this means they may not be re-elected to their appointment, said Chew Sutat, chairman of consultancy Shan De Advisors and former senior managing director at SGX.
'When there are disagreements on the board, directors should... try to find a way to influence and get the outcome desired in the interest of the company,' added Chew.
He was also against board directors leaking internal disputes to the media.
The CDL conflict came to light after Kwek Leng Beng informed the media on Feb 26 that he had filed court papers against his son. Subsequent exchanges between both parties were also through statements released to the media.
Chew said that boardroom disputes should be addressed in an 'amicable way' that does not affect the reputation of the company or negatively impact other shareholders or stakeholders.
Directors can ask for more information from other board members and steer the dispute into a constructive outcome where all stakeholders are aligned, noted Chew. Board members can also seek the advice of lawyers for regulatory or legal matters, he added.
Source: The Business Times © SPH Media Limited. Permission required for reproduction.
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