Developing a Succession Plan Rooted in Family Governance and Leveraging Family Councils and Family Offices

Of the approximately 3.4 million companies in Japan, around 97% are family businesses in which specific families exert significant influence through shareholding and management participation. Many of these family businesses face challenges regarding business succession, necessitating strategies that ensure both the continued existence and growth of the business and the perpetuation of the family itself. Such strategies are crucial and extend beyond mere tax planning for business succession; they require the development of a long-term succession plan grounded in robust family governance, followed by its systematic execution. Furthermore, leveraging mechanisms such as family councils and family offices is increasingly recognized as vital support for succession plans based on sound family governance. This paper aims to systematically review and analyze key considerations pertinent to the development of succession plans within family businesses, informed by family governance principles, and the effective utilization of family councils and family offices.