Sun Hung Kai passed to three brothers at once — the structure held until it did not

Sun Hung Kai Properties was Hong Kong’s largest property developer, founded in 1963 by Kwok Tak-seng. After the founder died in 1990 the company passed to his three sons in equal standing, expected to run it jointly. For nearly two decades the arrangement worked and the group became one of Asia’s most valuable listed developers.

Equal standing has no tie-breaker. When the brothers stopped agreeing on how the company should be run, there was no chairman with the authority to decide and no mechanism to buy anyone out. The dispute was settled instead by the family’s controlling shareholder, who removed one brother from the chairmanship in 2008 — a shareholder action taken to resolve what the board could not.

From there the disagreement left the company. It reached Hong Kong’s anti-corruption commission, and on the day of the resulting arrests in March 2012 the company lost about US$5.8 billion of market value in a session. The listed entity absorbed the cost of a dispute that its own governance had no way to contain.