Sister and brother Olena and Rostyslav Vovk created an advisory board for their family business, the biotechnology group Enzym Group and the cat and dog food manufacturer Kormotech, in 2024 and intend to transform it into a full-fledged supervisory board, Olena Vovk said.
“An advisory board is already an element of pure corporate governance. As of now, it is an advisory board that follows all the principles of a supervisory board. This is a transitional stage that should be completed after one term – formally moving from an advisory board to a supervisory board,” she said at the VII International Corporate Directors Forum organized in Kyiv last week by the Corporate Governance Professional Association (CGPA).
Vovk clarified that the advisory board began active work at the beginning of this year, and she and her brother had been preparing and assembling it for two years.
The business co-owner noted that the board has three main tasks, the first of which is the development of both businesses.
“Both businesses are developing in their own way and require certain expertise, which my brother and I already understand that we do not have and our management teams do not have either. It is better to get this expertise from the market, from experienced independent directors,” she explained.
Vovk emphasized that Enzyme and Kormotech are very active in international markets, so independent directors should be people with experience in these markets, and ideally, with an understanding of the Ukrainian context. For example, she clarified, Enzym exports 55-60% of its products.
“In addition, each of them has their own functional expertise, which is very necessary for us as owners, and also necessary for our teams, i.e. they play a certain role of coaching, an outside view of the areas that we need to pump up, or improve, or even open,” added the co-owner of the company, who oversees Enzym’s business, handing over the CEO position to former COO Andriy Tsehelyk, while her brother heads the Kormotech business.
At the same time, she noted that the advisory board does not develop a strategy for the business, but rather coordinates it and helps management teams improve it.
Vovk said that another task of the advisory board is to ensure business security, as both the main business units – Enzyme and Kormotech – are very ambitious, so it is necessary to balance the investment cycles of each business, because “there is only one pocket.”
The third task of the advisory board is to help build professional corporate governance so that future generations of the family can act as responsible shareholders. According to Ms. Vovk, the chairman of the board is a representative of a large Finnish family company with extensive experience in transferring business between different generations.
In addition, she said that the general governance scheme of Enzyme and Kormotech also includes a shareholders’ agreement signed between the owners, a family council and executive boards at each business unit, which have also undergone significant changes recently, including the creation of committees to better respond to market changes and implement development plans.
Vovk recalled that the business was originally founded by their father, Orest Vovk, director of the Lviv yeast plant, in 1993, and was taken over by his children Olena and Rostyslav after his death in 2014.
“In fact, we have been in the process of forming a corporate governance system for our family business almost all this time,” Vovk stated.
According to her, they, as shareholders of a family business, delegate some of their rights to their families so that future generations are aware of the responsibility they will have and participate in discussing and resolving business issues.
Vovk clarified that at this stage, she and her brother are active in the business and understand very well what is happening in the operations, and the children do not plan to enter the operations now.
She also emphasized that the family council should also select and approve the head of the advisory board.
As reported, in 2023, Kormotech’s turnover increased by 22.5% to $152 million from $124 million in 2022. The share of exports increased to 31% from 28% a year earlier.
In 2023, Enzym’s revenue increased by 32.3% to UAH 1 billion 838.15 million, while operating income increased almost 2.3 times to UAH 385.99 million.
