A long-awaited parliamentary committee inquiry into family businesses
has made 21 recommendations to bolster this significant sector in the
Australian economy. It is estimated that 70% of Australian businesses
are family businesses.
A key recommendation of the inquiry is establishment of an inter-departmental committee (IDC) to identify policy issues for family businesses that are not adequately captured within the existing policy framework and with existing Australian Bureau of Statistics (ABS) data collection. The IDC would also develop a formal definition of a family business.
The committee also recommended that ASIC consult with family businesses to gauge their understanding of the Corporations Act 2001, in particular directors’ duties and liabilities.
Other recommendations of the inquiry include:
- including the family business sector in current review processes regarding the operation of trust tax rules
- reviewing the operation of the 80 year rule which limits the lifespan of the family trading trust
- reviewing the 50 non-employee shareholder maximum for proprietary limited companies, which can readily be exceeded in family businesses forcing them to become unlisted public companies with enhanced reporting obligations.
The inquiry also identified the need for the IDC to consider various
issues regarding succession planning in family businesses and the policy
implications for the economy. In this regard, a recent BDO report found
that only 39% of family businesses have a succession plan which
nominates a successor for the CEO role.
The full report of the Parliamentary Joint Committee on Corporations and Financial Services regarding Family Businesses in Australia – different and significant: why they shouldn’t be overlooked can be accessed here.
The BDO report Family Business: Wealth & Knowledge Transfer Report can be accessed here.