Common European definition of a family business
- The majority of decision-making rights are in the possession of the natural person(s) who established the firm, or in the possession of the natural person(s) who has/have acquired the share capital of the firm, or in the possession of their spouses, parents, child, or children’s direct heirs.
- The majority of decision-making rights are indirect or direct.
- At least one representative of the family or kin is formally involved in the governance of the firm.
- Listed companies meet the definition of family enterprise if the person who established or acquired the firm (share capital) or their families or descendants possess 25 per cent of the decision-making rights mandated by their share capital.
Main challenges faced by family businesses
- the importance of preparing business transfers early
- access to finance
- taxation issues
- family governance - balancing family, ownership, gender balance rules, and business aspects
- attracting and retaining a skilled workforce
- entrepreneurship education and family-business-specific management training
Support available to family businesses
Commission activities in the area of family business
The European Commission promotes a family business-friendly environment, helps to spread information, and supports the sharing of best practices between EU countries. The EU also encourages national governments to adopt business-friendly taxation and company law, and support entrepreneurial education.