Practical governance tips for healthy succession in Taiwanese family businesses

Taiwanese family businesses are navigating a universal challenge: how to pass value, leadership and decision-making authority to the next generation without introducing avoidable risk.

Succession planning works best when it is treated as a governance and operating question (who decides what, and when), not just an asset-transfer exercise. At the recent STEP Taiwan Conference three themes dominated:

1. starting with a practical risk checklist
2. avoiding ownership fragmentation by aligning structure with governance
3. building cross-border assumptions into the plan from day one

Start with a risk checklist

A useful checklist shared by EY at the conference grouped common pressure points to help make succession more of an actionable process. Instead of jumping straight to documents and structures, clients can agree what the top risks are for their family and business; what ‘good’ looks like to them; and who owns each workstream. This includes the following considerations:

• Health risk: if a key decision-maker is suddenly unavailable, who has authority tomorrow morning?
• Personal vs corporate assets: what is inside the company, what is personal, and where are the grey areas?
• Loss of control: what events (inheritance, divorce, disputes, a sale) could change voting control, and how do we prevent surprises? 

Avoid ownership fragmentation: align structure with governance

Another strong theme was planning for what happens when ownership spreads across family branches. Even in successful businesses, fragmented ownership can slow decision-making and create friction over dividends, reinvestment and leadership appointments.

In the Taiwan context, practitioners often discuss using a closed company structure as a succession vehicle. In general terms, the practical aim is usually to restrict who can become a shareholder, manage transfers over time, and align corporate governance with the family’s longer-term estate plan. The questions we recommend our clients consider include:

• Who should be able to hold shares both today and in 10 years’ time? 
• What happens on death, incapacity, divorce or a family dispute - do the rules still work?
• How does the founder balance decision-making authority with fairness between family members who do and don’t work in the business?

Build cross-border planning into the baseline

Many Taiwanese families are cross-border by default, particularly where children study or build careers abroad. The conference discussion reflected this and looked at how family governance must work across jurisdictions, time zones and different legal frameworks.

Two points came through clearly: Firstly, cross-border marriages are a growing feature for Taiwanese families - with prenuptial agreements are commonly used as part of wider planning; and secondly, families often combine tools such as trusts, offshore companies (including BVI, Guernsey and Jersey), and insurance vehicles - especially where assets, beneficiaries or future decision makers are overseas.

Where there is a US connection, foreign grantor trust arrangements are often used. The key takeaway I’d emphasise is that the sequencing is as important as the structure or structures chosen. It is crucial that cross-border touchpoints are identified early (where people live, study, hold citizenship, own assets and pay tax) to avoid the need to retrofit solutions under time pressure later.

Common pitfalls and how to avoid them

• Leaving governance too late: documents exist, but no one knows how decisions are actually made. Fix by agreeing on roles, meeting objectives, and documenting escalation routes.
• Over-engineering the structure: a solution that is technically elegant but operationally ignored will fail. Fix by designing for how the family operates day-to-day.
• Assuming “domestic only”: children studying or working overseas changes the planning baseline. Fix by mapping jurisdictions early and pressure-testing the plan against life events.

At Praxis, we work with Taiwanese founders, their families and advisors on practical governance and structuring discussions, bringing together corporate, private client and cross-border considerations to design and implement solutions that are workable in real life, not just on paper.

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Please note that this article is intended to provide a general overview of the matters to which it relates. It is not intended as professional advice and should not be relied upon as such. Any engagement in respect of our professional services is subject to our standard terms and conditions of business and the provision of all necessary due diligence. This insight was developed with the support of AI tools, with analysis, interpretation and final editorial decisions made by our team. © Praxis 2026