The relevance of corporate governance guidelines to family public interest companies in Malta

Abstract

Purpose: The objectives of the study were to investigate the relevance of guidelines on good corporate governance to family public interest companies in Malta and to recommend relevant guidelines. Design: The study used a mixed method approach. A total of seventeen respondents submitted their replies to a structured questionnaire. The respondents represented twelve companies owned by fifteen family interests. Eleven respondents were interviewed using a semi-structured interview.

Findings: Findings indicate that there is a need for guidelines to be improved in line with the needs of public interest companies characterised by dominant family interests. Guidelines should contain elements that address the governance structure, appointment of directors, employment of managers, conduct, compensation, performance evaluation, and ownership of family public interest companies. These elements could be included in the present guidelines. Alternatively, a set of guidelines could be issued specifically for family public interest companies. Conclusions: The study concludes that there is a need for a set of guidelines relevant to family public interest companies. There is a need for family members to formally document a family governance plan. There needs to be clearer guidance on the appointment and composition of the Board given the peculiarities of family companies. The study also concludes that the continued existence of a company is more important in the context of family public interest companies. Value: The study recommends possible principles and guidelines meant for family public interest companies that can be used by the relevant authorities to improve existing guidelines.