Strengthening Governance from Within: The Role of Executive and Non-Executive Directors in Family Businesses

Janice Galea

Array

30 April, 2025

Family businesses, while anchored in strong values and long-term vision, often face governance challenges due to blurred roles and concentrated decision-making. This is particularly true in Malta, where family members often dominate boards without clear role distinctions. Strengthening internal governance through defined roles for executive and non-executive directors (EDs and NEDs) can reduce conflict and improve strategic focus. EDs, typically family members involved in daily operations, drive implementation but may lack objectivity. NEDs, whether family or independent, provide oversight, mediate disputes, and shift attention to long-term goals like succession and risk management. Introducing NEDs - such as retired relatives or external advisors - adds impartiality and strategic depth. Clarifying these roles fosters balanced leadership, enhances accountability, and prepares the business for sustainable growth. While internal reforms lay the groundwork, future inclusion of external professionals can further strengthen governance and ensure enduring family and business harmony.

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