By Fredrick P. Niemann, Esq., a NJ Partnership Attorney
Family-run partnerships differ from publicly-held partnerships in their chain of command. Family-run partnerships are run primarily by family members that comprise either all or most of the board of directors. These partnerships are also usually owned by a small number of family members, each owning a share of the business. There is no interest in the business that is sold publicly.
Publicly-held partnerships on the other hand may be owned by a large number of individuals that do not know each other, but each have a small ownership interest in the business. The board of directors is comprised entirely of directors that are elected by those who have ownership in the partnership. The board of directors typically have no familial ties to anyone who owns the business.
While their chain of command differs, both types of NJ Partnerships are comprised of board members that owe a fiduciary duty to all those who have an ownership interest in the enterprise. This fiduciary duty requires all board members to act in good faith on behalf of the business. This duty requires them to act in a manner that a reasonable person in a similar position, under similar circumstances, would act. It also requires them to act in the best interests of the partnership at all times. The fiduciary duty requirement helps protect minority owners and ensures the partnership is run properly.
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