The LEE KUM KEE (LKK) Case Study: Family Governance and Structure

This report examines the family governance structure of LEE KUM KEE (LKK), a prominent family-owned business. The report explores how LKK manages its family members, particularly focusing on the distribution of shares among the four brothers and the role of the daughter. The report highlights the need for a robust corporate governance system to address challenges and ensure fairness. It also discusses the formation and functions of the family council, established to manage family size, investments, and business development. The council's responsibilities include organizing meetings, addressing key issues, and rotating responsibilities among core members. The report concludes by emphasizing the importance of governance and the council in maintaining family unity and achieving business objectives. The report is based on information from sources like The Hong Kong University and EJ Insight.

Contents
Question 1........................................................................................................................................2
Question 2........................................................................................................................................3
References........................................................................................................................................4
1

Question 1
The LEE KUM KEE CO. LTD (LKK) is identified as one of the leading company with a very
large partnership of the family members. To manage generations of family and to allot the
specific working profile to every member, the family governance structure is prepared. Firstly,
the equal shares to the four brothers (i.e. Eddy Lee, David Lee, Sammy Lee and David Lee) are
distributed by the father, Man Tat. All the major decisions are also planned by the four brothers
and father. But regarding the daughter Elizabeth, the situation related to the allotment of shares is
not clear. So, Man Tat decided that the corporate governance system should be re-examined and
managed in a definite manner with some changes and areas of improvement. Some of the
specific reasons to introduce the family governance structures are defined below in a specific
manner.
 The major reason is the equal distribution of the shares between the four brothers and
sisters.
 To set the definite rules, governance is identified. By this governance, entry to the
outsiders are also provided. By this, the decision making system can also get
strengthened in a structured manner.
 The expansion of the plans and management of future perspectives can also be managed
by planning the governance.
 The governance also helps in solving the issues related to the complex circumstances and
the inappropriate issues. These aspects can also be solved by hiring executives from the
different backgrounds and with different approaches (The Hong Kong University, 2015).
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In short, the governance or corporate governance is the key source for an improvement of the
organization in a structured manner.
Question 2
The family size of Man Tat is very large. To manage the family and the rights of each and every
member, the council was planned. The council was first developed in the year 2003. The major
purpose of the council is to manage the large family, increment in business and development in
specific investment interests. The council operates the meeting for four days and four times a
year. In these meetings, the council plays the most prominent roles in defining the solutions for
the issues and future aspects also gets discussed. Apart from this, the family discussions on
investment and financial aspects related to the business are also focused to help the council (Pao,
2016). The council holds the authority to rotate responsibilities among the core members after
every quarter time period. The management of the four days meeting is also identified by the
council. The specific planning and distribution of the task are identified with the help of the
council. During the first day, current family news is being discussed and family get together is
planned with the spouse and other family members. In another three days, the five critical issues
related to the Lee family are going to be discussed. These issues relate to the Lee family office,
family foundation, family investment, constitution and family training center. The council and
the individual members related to it always try to achieve the target in a specific mode. In short,
the council is responsible for holding the major responsibilities related to the family.
3

References
Pao, J. (2016, November 16). Lee Kum Kee: The family grows and stays together. Retrieved
from http://www.ejinsight.com/20161116-lee-kum-kee-the-family-grows-and-stays-
together/
The Hong Kong University. (2015). Preserving Family Wealth Across Generations . Retrieved
from
http://www.afbes.ust.hk/public/userfiles/files/HKUST_PreservingFamilyWealthAcrossG
enerations_20150312.pdf
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