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Signature Qualification CA that Empowers to Lead PAKISTAN Cover Story Governance Issues in Family Owned Businesses by Mohammad Noman Akhtar Introduction The issue of family governance is not new to the corporate world and it has relevance to every type of business irrespective of its legal structure, i.e. whether it is sole proprietorship, partnership or in the form of incorporated companies. In the article, the concept of family governance has been covered with special reference to incorporated companies which have some unique characteristics, most importantly the ownership distinguished from management. However, different aspects of this article, particularly recommendations to handle issues being surfaced from family governance may be applied to sole proprietorship and partnership businesses, in order to enhance the productivity of employees, align the structure of organisation and improve the efficiency and effectiveness of operations. Many people may attempt to perceive that the family governance issue is more relevant to private company or public unlisted company due to closely held ownership, but this perception is not based on ground realities and facts. In Pakistan, there are a considerable number of listed companies which are being owned, directly or indirectly, and controlled, by members of the same family. Karachi Stock Exchange (KSE) Limited has already issued Code of Corporate Governance in 2002, revised in 2012, in order to address the governance issues in listed companies. It is also pertinent to mention that the corporate regulator, Securities and Exchange Commission of Pakistan (SECP) and financial regulator, State Bank of Pakistan (SBP), regulate and monitor some specialised sectors very closely such as banking sector, non-banking finance companies (NBFCs), insurance sector etc., through specialised regulatory framework and continuing supervision, for example, NBFC regulatory framework makes it compulsory for NBFCs to appoint independent directors, the compliance of which is checked by dedicated off - site and on - site function of SECP on a continuous basis. Therefore, in such closely monitored sectors, regardless of the fact that the company is listed or unlisted, the issues pertaining to family governance are less severe as compared to other sectors. 26 The Pakistan Accountant July - September 2015