【Succession Trust for Micro and Small Enterprises】

Case Study: Business Succession Trust for a Micro Enterprise

Mr. Chen operates a food processing factory with an annual revenue of NT$50 million.
His 28-year-old son lacks management experience, presenting a challenge in business succession.
To address this, Mr. Chen placed 60% of the company’s shares into a trust and established a gradual transition mechanism.

The trust requires his son to rotate through entry-level positions — including production and sales — for two years. Only upon passing performance evaluations may he enter management.

A tiered authorization system is set based on performance:

• If annual profit grows by 10%, 20% of dividend rights are unlocked.

• If the business suffers losses for two consecutive years, a professional manager appointed by the trust will take over operations.

To ensure team stability, 10% of annual profits are allocated to an employee bonus pool.
Key technical staff also receive equity incentives.

This arrangement avoids the operational risks of a hasty leadership handover and helps identify a qualified successor through practical evaluation — enabling a smooth transition for a traditional manufacturing business.

By establishing a family trust, the company ensures stable succession and mitigates the risks of forced inheritance.

• Ensures a smooth business transition, avoiding the risks of abrupt succession

• Uses performance assessments to identify a capable heir

• Aligns employee interests to maintain team stability