The Organization for Economic Co-operation and Development (OECD) Principles of Corporate Governance (the Principles) are widely regarded as the global benchmark for corporate control and accountability. The Principles are soft law and hence not legally binding. They provide guidance on the roles of corporate decision-makers, like shareholders and boards, and external stakeholders, including policymakers, employees, and creditors.
The Principles are organized around six core themes:
- Ensuring the Basis for an Effective Corporate Governance Framework
This principle calls for clear roles among branches of government – lawmaking, administration, and adjudication – and a commitment to the rule of law. - The Rights and Equitable Treatment of Shareholders and Key Ownership Functions
Focused on protecting minority and independent shareholders from exploitation by controlling interests. - Institutional Investors, Stock Markets, and Other Intermediaries
Requires these actors to act in the best interests of their beneficiaries. - Disclosure and Transparency
Calls for companies to provide timely, material information to the public and ensure equal access to that information. - The Responsibilities of the Board
Demands accountability from both executive and non-executive directors to shareholders and other stakeholders. - Sustainability and Resilience
Encourages companies to manage environmental and social risks, with an emphasis on climate strategy planning and disclosure. This principle covers an earlier version of a chapter on stakeholder roles.
Since their introduction in 1999, the Principles have been revised three times, most recently in 2023. The latest revision responds to growing global concerns about climate change, adding a new chapter on Sustainability and Resilience aimed at addressing a financially material risk.
While the OECD has turned its attention to climate resilience albeit insufficiently, its 2023 update largely overlooks a crucial component of today’s global economy: family businesses.
Family Businesses: The Missing Chapter
This omission is surprising for two key reasons:
- Family businesses are well suited to soft law
Family-owned companies – especially in Asia – usually have concentrated ownership, with board decisions made mostly by family members. For this reason, a one-size-fits-all rule could hinder growth. The Principles, with their non-binding nature, are ideally positioned to offer high-level guidance to improve governance practices across different types of family enterprises. - Family businesses drive the economy
From conglomerates in Asia to luxury brands in Europe, family firms play a central role in national and global economies. In Asia – home to 60 percent of global economic growth – family businessesdominate major industries.
According to Bloomberg’s Asia’s 20 Richest Families of 2025 report, the top-ranked businesses are all family-owned and operated, with most being led by Thai families .
Indonesia, Southeast Asia’s largest market, is home to the region’s largest family enterprises by size and number, many of which drive significant lending activities, bond issuances, and mergers and acquisitions that define Asia’s business landscape.
The OECD’s limited focus on this sector might reflect its different historical priorities. Until recently, few Asian countries were members: Indonesia and Thailand only joined in February and June 2024, respectively. But within the Group of Twenty – which endorses the Principles – Asian representation is strong. Members like Indonesia, China, and Republic of Korea are home to dominant family conglomerates or chaebols.
In a slowing global economy, family businesses continue to drive innovation and create jobs. Their impact is also clear in Europe, where luxury brands like Hermès and Louis Vuitton Moët Hennessy (LVMH) started as family enterprises and have grown into global icons while maintaining multi-generational family control.
Moving Forward
If the Principles are to stay relevant and inclusive, it is time to give family businesses the attention they deserve. A dedicated chapter VII – “Family Businesses” – could include case studies from Asia and Europe, along with guidance on succession planning, stakeholder accountability, and conflict resolution.
Family businesses are key engines of global growth. By addressing their unique challenges with guidance and acknowledging their contributions, the OECD can create a more comprehensive and forward-looking framework.
This post comes to us from Luther Lie, a corporate lawyer admitted in New York and Indonesia. It is based on his recent article, “OECD Principles of Corporate Governance,” available here.