Governance & Compliance

Corporate governance and family governance are the operating system of a family business and the entrepreneurial family. They connect corporate management with owner interests and create clear rules for their interaction.

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Governance forms the basis for good leadership.

The scope of governance must fit the situation and the DNA of the company and the family. Only then will it have the desired effect.

Governance provides the foundation for anchoring owner interests in leadership and decision-making. This requires a decision-making architecture that ensures the ability to act while leaving room for development and innovation. Owners define the normative framework, thereby creating the conditions to align earnings, liquidity, and risk management with the company's best interests. This active design process lays the groundwork for succession readiness and a constructive approach to conflict.

How do governance and compliance interact within the company?How do governance and compliance interact within the company?

Governance establishes the principles by which family, owners, and the company interact. Compliance creates the structures and rules necessary to meet legal requirements, limit liability, financial, and reputational risks, and permanently secure market access.

What role does governance play beyond rules?What role does governance play beyond rules?

However, governance encompasses more than just rules and requirements. Family governance defines the values of the entrepreneurial family and provides guidance for decisions that go beyond day-to-day operations. This fosters responsibility, sustainability, and clarity regarding issues that affect the long-term preservation of the family business and family assets.

Tailoring governance to the company structureTailoring governance to the company structure

The structure and scope of corporate governance and family governance depend on the size and structure of the company and the owning family. As the complexity of the business and ownership increases, so do the requirements for governance and compliance and their effective implementation.

Governance doesn't have to be complicated – even a "governance light" approach creates robustness for succession and conflict resolution.

Does your governance provide clarity for your family, your assets, and your company?

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Governance & Compliance

Building governance

Governance sets out how family, ownership and company work together. It creates clarity about who takes decisions, who carries responsibility and how control is organised. Within the family, the guard rails for ownership and leadership take shape, along with the owner strategy for the company. Corporate governance translates those principles into the management and steering of the business and typically covers compliance, risk management and control mechanisms.

Compliance management

A compliance management system (CMS) covers all the organisational measures, processes and principles of conduct with which a company ensures that laws, regulatory requirements and internal rules are observed. The aim is to identify risks early, avoid breaches and protect the company effectively. Anchored pragmatically in existing business processes, a CMS can be integrated into day-to-day work efficiently and with real effect. Established standards such as DIN ISO 37301 or IDW PS 980 support a risk-oriented approach.

Compliance areas

Which compliance areas matter for a company follows from its business model, industry and market environment. We therefore identify and assess these areas on a risk-oriented basis and from the company's actual situation, so that attention goes to the topics that genuinely matter. Beyond that, some compliance areas affect almost every company, for example tax compliance for meeting fiscal obligations, or corporate compliance for company law responsibilities and the duties of governing bodies.

Compliance culture

Acting with integrity and responsibility does not happen by itself. The convictions of management and shareholders have to become visible inside the company, so that employees make the right decisions even in difficult situations and unfair business practices find no room. The tone from the top shapes the compliance culture decisively. Clear and transparent communication creates the basis for an effective CMS. What matters is not laws and regulations, but concrete guidance, typical risk situations and the behaviour patterns that can lead to compliance breaches and damage.

Corporate governance

Good corporate management creates the ability to act. That includes transparent reporting, clear decision thresholds and effective risk and compliance management, complemented by an advisory board where useful. In more complex companies these steering instruments develop into a leadership model suited to the mid market, with rules of procedure and clearly defined authorities. Risk and compliance management reach a high level of maturity. An advisory board with members from outside the ownership circle adds further perspectives. Succession and remuneration are handled just as professionally.

Family governance

At the centre stands the ability of the ownership circle to take decisions together and to remain able to act over the long term. With only a few shareholders, clear guidelines on strategy, distribution and reinvestment often suffice, along with initial arrangements for emergencies and succession. As the shareholder circle grows, binding rules of the game become necessary. A family constitution provides orientation on values, ownership, succession and the role of the family in the company. Clear rules for handling conflict safeguard the ability to act. At the same time, owners develop the competences they need for their responsibility towards the company and the family assets.

PROJECT EXAMPLES

Governance & Compliance

Select a topic area

Further development of compliance management in an internationally active group

Industry: Trade

Our role: Consultant

Project objectives

  • Minimizing liability risks, avoiding financial and reputational damage, ensuring market access (tenders)
  • Pragmatic implementation into existing processes
  • Setting up a Compliance Management System according to ISO 37301

Key results

  • Defining the target vision with strategy-based prioritization
  • Reorganizing central responsibilities and integrating regional subsidiaries
  • Further development of risk management through the reassessment of potential risks
  • Establishing a compliance reporting system for the supervisory board

Approach

  • Analysis of the current situation and clarification of the strategy-based compliance profile to develop a target vision with defined priorities
  • Structural analysis including an assessment of company requirements along the value chain and definition of compliance areas
  • Assessing communication requirements
  • Transitioning results into a logical project workflow for implementation
  • Detailed development and structuring of the CMS, including defining methods for integration into processes and structures, methods for oversight, methods for monitoring, and methods for risk management
  • Implementation including adjustments to the organization, processes, and required documentation (code of conduct, policies, etc.)
  • Designing training and development programs for the respective business units
  • Monitoring effectiveness

Implementation of a whistleblower system in a medium-sized group

Industry: Manufacturer of electronic components

Our role: Consultant

Project objectives

  • Legally compliant implementation of the anticipated Whistleblower Protection Act within the company's own operations
  • Proactively embedding it into the company as part of sustainable corporate governance
  • Designing and introducing the necessary processes

Key results

  • Implementing the whistleblower protection system
  • Expanding the system to include a "complaint box" and "suggestions for improvement" module
  • Audit-proof documentation
  • Processes for ensuring the legally defined procedure for reports and follow-up measures
  • Processes for assessing incoming reports regarding their risk level

Approach

  • Analyzing the corporate group structure with a focus on international locations, language, number of employees, works council, etc.
  • Workshop with relevant stakeholders to determine the structure of the whistleblower protection system, its integration into the organization, and requirements for the communication concept
  • Translating workshop outcomes into a requirements catalog for selecting suitable whistleblower protection software and choosing a provider
  • Active implementation management, including the setup of digital, analog, telephone, and in-person reporting channels, ensuring secure communication with whistleblowers, and adding "complaint box" and "suggestion for improvement" features
  • Setting up case management in the software tool with automatic deadline monitoring, archiving, and documentation functions
  • Appointing independent case handlers and training the case handlers
  • Creating a code of conduct and providing training on the code of conduct
  • Developing accompanying communication in collaboration with HR

Setting up an accounting-related internal control system

Industry: Crafts and Trades

Our role: Consultant

Project objectives

  • Establishing an ICS to ensure the complete and accurate representation of the company's assets, financial position, and earnings in monthly and annual financial statements according to the German Commercial Code (HGB)
  • Rigorous translation of the IDW PS 261 n.F. standard into the internal control system (ICS)

Key results

  • Detecting systematic errors in the creation process
  • Preventing individual errors by modifying processes
  • Creation of modern working papers
  • Integration with risk management

Approach

  • Comprehensive analysis of the current situation regarding accounting, including processes, information supply, and accounting and valuation rules
  • Evaluation of processes and working papers
  • Coordination of identified change requirements with management and the auditor
  • Creation of modified processes with descriptions and the addition of modified working papers to the company's QM system, taking into account the approach of IDW PS 261 n.F. with audit and control loops, including documentation.
  • Implementation parallel to the preparation of the annual financial statements

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