While the family council is based on an open participation concept, the family board is a decision making mechanism, primarily consisting of shareholder family members and focusing on areas in which concepts of family/business and shareholding/management overlap. Apart from shareholder family members performing various executive functions in the company, shareholders who are family members without executive functions may also participate in the family board. The family board shapes the future of the company, holding open the effective communication channels with the family council, working towards the establishment of a corporate system independent from specific individuals, and preparing the infrastructure required for the sound transfer of the company to the next generation.
The success of the family board largely depends on establishing a balance between three critical variables: the company's capital needs, the degree of liquidity needed to satisfy the personal financial needs of the family members, and the need of the owners to control the company.
During the transition process the family board may be considered as the organ that functions as the board of directors, moving toward the establishment of a sound corporate governance structure.
