From the founder at the helm to a dual model? A new code reshaping family business governance

For decades, family capitalism has been the backbone of the Italian economy. But with the handover from founders to the next generations, the nature of leadership is changing. Younger people are less drawn to the “one-man-at-the-top” model and more inclined to share responsibility, valuing collegiality. They are also more aware of the risks that no single leader can manage alone (geopolitical shocks, environmental crises, pandemics, and so on). For them, governance is not a bureaucratic constraint but a tool to make the business more resilient.

This generational shift explains the growing demand for clear rules to support succession processes, rules that can enhance transparency, legitimacy, and strategic capacity. While listed companies have long relied on detailed codes, for the world of unlisted family businesses (which are far more in number and essential for jobs and innovation) a self-regulation code can mean the difference between an orderly transition and a chaotic, destructive process.

And here we have it: Principi per il Governo delle società non quotate a controllo familiare. Codice di autodisciplina (Principles for the Governance of Unlisted Family-controlled Companies. Self-regulation code), presented on September 22 at SDA Bocconi School of Management. Voluntary and based on the comply-or-explain principle, this set of standards represents a concrete step toward stronger and more credible family capitalism.

The Code is the result of the work of Assonime, AIDAF, the Corporate Governance Lab at SDA Bocconi School of Management, and the AIDAF-EY Chair in Strategic Management in Family Business in memory of Alberto Falck at Bocconi University. Eight years after the first edition, the 2017 version has been updated and almost completely rewritten, in light of the fact that the family business context has changed radically. In fact, the ESG revolution has forced companies to engage with environmental, social, and governance issues that were once marginal; recurring crises have made it clear that the risks to contend with are broader and more complex; and a massive generational turnover has challenged companies that have grown in size but still lack adequate governance structures. Meanwhile, similar codes have proliferated at the European and international level, shifting attention from listed to unlisted companies. And while in 2017, good governance was the prerogative of a few pioneering firms, today it is a widespread practice that needs to be codified and shared.

The first pillar of the new Code concerns the governing body, which must be collegial and open to external directors (at least two) with the skills and authority to have a real impact on decision-making processes. In larger companies, one of these must be independent according to the criteria of the Listed Companies’ Code. This is a cultural shift that allows family firms to attract qualified managers and to open up to a more structured dialogue with stakeholders.

A second element is succession management. The Code recommends clear rules to ensure continuity of governance and management, including emergency procedures for unforeseen events. The goal is to encourage a gradual separation between the family’s strategic role and operational management, which is entrusted to professionals with the necessary skills. Within this framework, companies are also encouraged to consider the dualistic model, which places family members on the supervisory board and business executives on the management board: a model that, if adopted, would facilitate generational change and the professionalization of Italian family businesses.

The third pillar is sustainability. The Code requires the governing body to adopt procedures for reporting not only on financial performance but also on environmental and social impact. For companies not subject to reporting obligations, a voluntary framework based on European standards  is provided (CSRD). Innovation here goes even further: Tools such as profit-sharing for employees are encouraged, signaling a governance model that is rooted in the community and consolidates the alignment between family ownership and stakeholders.

But the innovations are not only in the content. The new Code is now more concise (14 pages compared to nearly 40 in the 2017 version), and structured into Principles and non-binding Guidelines. The goal is usability: less didactic, since family firms have now reached a higher level of awareness, and more technical, designed to be adopted by medium-sized companies too. Clarity goes hand in hand with the principle of proportionality: the recommendations that apply to larger companies are strict, while for medium-sized enterprises they are voluntary suggestions.

Finally, the most radical change: compliance with the Code will be monitored by the new Corporate Governance Committee for Unlisted Family Businesses, supported by a technical secretariat that will assist companies in implementation. So the Code will no longer be just a manual to be shelved, but a living tool, updated annually, and fed by constant dialogue with businesses. If this ambition is successful, the initiative could redefine the way Italian family capitalism addresses its most delicate challenges: succession, strategy, and social legitimacy.