Experts


(Women and) Succession in Family Companies

Prof Kalls / WU Wien 3/2013

Professor Dr. Susanne Kalss teaches civil and company law at the University of Economics and Business in Vienna.  Her focus: family companies

 

Mrs. K.: Are there any women in top management positions in family companies?

Prof. Kalss: I can already see a fair number of women in supervisory boards of family companies here in Austria. We offer a course called “Corporate Governance Excellence” at our University and I have observed an increasing number of women attending. These women attend the course prior to taking a seat in the supervisory board of “their” family company.

Mrs. K.: Is it easier for women to become member of a supervisory board in family companies?

Prof. Kalss: Women get a seat in the supervisory board not only due to their right as an heir but also because, in my view, talent gets a chance more often in family companies.

Mrs. K.: Can you also see women taking leading roles in executive boards of family companies?

Prof. Kalss: Not that many, but there are. The women on my radar  have been educated at top universities. Many of them completed international MBA’s. Before moving into the family business they  gained experience by working somewhere else. They are highly competitive; they are as good as men.

Mrs. K.: Talking about succession – what are the challenges from a legal point of view? 

Prof. Kalss: Succession is one of the biggest threats to a company’s existence. Transitioning the business for the next generation is very important and can be extremely challenging. 

Mrs. K.: Family feuds do happen quite often.

 

Prof. Kalss: Apart from determining which of their family should run the company, owners have to consider “forced heirship” rules as well as tax obstacles. “Forced heirship” rules can only be partly overridden by a will. However, I can see some positive developments in the recent changes of succession law in Austria (which will come into effect as of January 1st, 2017). Inheritance law stipulates that a fixed minimum share of a property (i.e. the business) must pass on to certain blood relatives. The regulation concerning the so-called compulsory portion for those children who do not run the company is changing: up to now the compulsory portion had to be paid in cash. With the new legislation the compulsory portion can be paid in the form of non-voting profit sharing rights. This will make succession a lot easier. There is a similar system in the Netherlands but Germany, Switzerland, France or Italy doesn’t have it. It’s different again in the UK (there is no such thing as“forced heirship” in the UK).

Mrs. K.: Is this fair? Should not all children be treated equally?

 

Prof. Kalss: In my view the continuity or the survival of the company has to have top priority. This is more important than the different interests of individual family members. It’s the company which is the source of wealth. The heirs and family members can only be provided for when it is assured that the company is in a position to generate profits in the future.

Mrs. K.: In our generation a lot of wealth is passed on through inheritance.

 

Prof. Kalss: People are more reliant on inheritance as they find they haven’t made pension provisions during their lifetimes, and have an expectation that when their parents pass away, they will inherit the estate. We have a course on succession law here at university. It’s the course which receives the most attention from students. No other course catches the attention of my students more than this one.