【Family Business Shareholding Succession Trust: The Stabilizing Anchor in Business Legacy Succession】

Mr. Cheung runs a long-established manufacturing business that has been developed over three generations and holds a significant position in the industry.
As the second-generation patriarch, Chairman Cheung, grows older, the succession of shareholding in the family business has become an urgent issue.
With numerous family members holding different interests—and some of his children showing little interest in managing the business—a direct distribution of shares could lead to decision-making chaos and fragmented ownership.
To ensure the company’s long-term stability and a smooth transition of both family wealth and corporate control, Chairman Cheung decided to establish a Family Business Shareholding Succession Trust.

Chairman Cheung transferred 60% of the family-owned shares into the trust and worked with the trustee to develop comprehensive trust terms, stipulating that the shares are to be held and managed by the trustee.
During the trust’s duration, the trustee exercises shareholder rights, including voting on major decisions and managing dividend distributions.
The trust sets clear conditions for shareholding benefits: Children must work in the company for at least five years and pass a management evaluation before gradually receiving benefits from the trust-held shares.
If any child demonstrates sufficient management ability, they may be granted partial decision-making authority over the shares, subject to evaluation by the family committee.
Additionally, a team of professional managers has been brought in to assist with company operations, creating a dual-layer safeguard alongside the trust structure.
By utilizing a family trust to safeguard corporate control, the Cheung family has successfully avoided the pitfalls of direct share distribution, which could have led to diluted control and operational disorder.
While ensuring fair returns for family members, the trust arrangement also consolidates decision-making power and maintains strategic consistency within the company.
With professional managers working hand-in-hand with the trust mechanism, modern management practices are infused into the company, enabling sustainable development and orderly succession of ownership in the family business.