Hong Kong patriarchs typically run their companies with a rod of iron. Aided by boardrooms packed with family members, they have been cut plenty of slack through vague legal definitions and light regulations. Over the years, minority shareholders have been roundly abused by controlling shareholders, aided and abetted by less than independent boards. Modernisers point to inadequate controls over ageing autocrats who make crucial company decisions without having board representation. Many is the firm whose founding member has long retired but continues to exert powerful control over decisions. Making so-called 'shadow-directors' accountable will become all the more important as first-generation tycoons enter their salad days. Are we to believe that Li Ka-shing will really handover full control of his corporate empire following his scheduled retirement next year? If not, the question is what rules will he and other greying tycoons be subject to? After all, Hong Kong is dominated by patriarchal-run firms. As of January, 53 per cent of all listed companies were found to have one shareholder or family group of shareholders owning 50 per cent of their entire issued share capital, a survey by the Hong Kong Society of Accountants found. Moreover, almost one-third of all listed companies have boards where at least half the executive directors are related family members. The implication is obvious. In a business culture where filial-piety runs deep and deference to age remains strong, directors are often loath to challenge the patriarch's dictate. Most companies in Hong Kong and other parts of Southeast Asia are dominated by such ownership arrangements. Asia is, of course, not unique in this regard. Western countries also have had to deal with the unique temptations that keeping it in the family throws up for listed firms. Both Britain and Australia have developed definitions of shadow-directors which makes it difficult for a family boss - or any other behind the scenes operator - to meddle in company affairs with impunity. British companies give a specific definition of a shadow-director, while the Australian-equivalent makes both directors and shadow-directors equally liable when fiduciary duty is breached. Hong Kong rules are less clear-cut, which, combined with a traditionally light regulatory touch, has allowed shadow-directors considerable leeway. In 1996 the law reform commission investigated the issue, recommending that insolvency trading provisions be included in the companies' ordinance. It added that the present definition of a shadow-director, where a majority of board members are controlled, needed to be tightened. Today, it is all too easy for shadow-directors to avoid personal liability by appointing nominees to act as directors. The piecemeal system of regulation, allowing family patriarchs unchecked power over sycophantic-boards, comes under attack from lawyers Baker & McKenzie in the Hong Kong Company Secretary publication. The law should be changed to expressly include persons holding sway over directors' decisions, they write. In short, shadow-directors should be made legally accountable. Corporate patriarchs may engage in roguish behaviour - shuffling assets and the like - but are, at least, unlikely to steal from themselves. Efforts to catch shadow-directors through insolvency legislation seems a step in the right direction. Imposing legal liability on those making critical decisions harmful to minority shareholders' interests, in light of bankruptcy or a winding up action redresses the legal balance. Going further and making shadow-directors fully culpable for their actions, together with other directors, would be an even bolder step.