Glossary J - Z

Glossary J-Z

  • Junior Board. A board set up for young family members. Often, the junior boards are set up for training purposes.
  • Listed company. Listed or quoted is a company whose shares can be bought or sold on the Stock Exchange.
  • Nonexecutive external director (NED). Non-executive director or outside director is a member of the board of directors of a company who does not form part of the executive management team. A NED is not necessarily an independent director.
  • Organogram or organization chart. Diagram that shows the structure of an organization and the relationships and relative ranks of its parts and positions/jobs.
  • Parent-offspring partnership. Term used in the development model to refer to the stage where a controlling owner has transitioned ownership and/or management responsibilities to his/her children.
  • Preemptive rights. The right of existing shareholders to participate in any capital increase. Pre-emptive rights should preclude the company from selling new share on favorable terms to only some shareholders or to non-shareholders.
  • Proxy. Someone empowered to vote on behalf of a shareholder at the shareholders’ meeting.
  • Shareholder agreement. Regulates relations among shareholders. It sets out rights to purchase and rights of pre-emption, takeover rights, how shareholders are admitted to and leave the company, voting and proxy regulations, and the company’s valuation process in the event that a member leaves.
  • Sibling partnership. Term used in the development model to refer to the stage where ownership has passed to a succeeding generation consisting of siblings.
  • Stakeholders. Individuals or groups, in addition to shareholders, who have a significant interest in, and /or influence over, the company’s operations and achievement of the company’s goals, such as employees, creditors, suppliers, customers, and the community.
  • Straight voting method. Under the straight voting method for directors, majority shareholders or owners can elect all of the board members, while the minority shareholders can elect none. Under the straight voting each shareholder votes the number of shares he or she owns for as many candidates as may be elected (see definition of cumulative voting).
  • Succession or continuity planning. The process and content of preparing for a successful transition of leadership in a family enterprise, often from one generation to the next.
  • Systems theory. Holistic explanatory model that recognizes that all parts of a system are interdependent and that the actions of one group impacts other groups in the system.
  • Tag-along rights. When a controlling shareholder sells enough equity to control the company to a new owner, the right of other shareholders to sell their shares, usually on the same terms as the controlling shareholder; i.e. a requirement for someone seeking to acquire control stake to offer to buy equity from all shareholders, not just the controlling shareholder.
  • Three Circle Model. Describes, in the family business, the interacting and interdependent roles of family, enterprise, and ownership, with boundaries often unclear as one individual may be part of two or three circles wearing different hats at different times and for different purposes (created by Renato Taguiri and John Davis, 1982).
  • Transition. Any major shift in leadership often occurring after death or retirement; can be from one sibling to another but most often refers to the change from one generation to the next in the evolution of a family enterprise.
  • Trusted advisor. Has a special personal advisory relationship with the client in which he/she provides a perspective on any topic that the client desires; usually based in one of the main professions of origin but evolved over time into a relationship of trust and confidence in an areas that extend beyond the advisor’s major area. This is the person to whom the client turns for advice regarding major issues and decisions.