Family Constitution



Family Constitution

"Your family & business work to the degree you keep your agreements"


Due to the different complexities that each Family Business has to face there is no better way to secure continuity other than by clarifying from the outset what the Shared Purpose of the family is. Once this is clarified then we will help the family to clarify 'How' they want to relate to each other and the business, through the formation of the Family Constitution. We believe that the family constitution is among the most important steps a family business can take to secure and strengthen its involvement in the business and, most importantly, its family.

The objectives of the Family Constitution are to:

  • Ensure harmonious collaboration between the involved family member and between the family and the business
  • To clearly establish a fair process for the distribution of the projects generated by the business
  • To strengthen the relationships between the family members
  • Guarantee the independence and prosperity of the family business

The most important and salient sections involved in the Family constitutions are:

  • Clarifying the Shared Purpose of 'Why' the family wants to be in business together
  • Establishing the Family Governance Proceeding
  • Clarify and establishing rules who can be Ownership Governance
  • Establishing Corporate Governance rules of whom the family members will relate to the business
 

Each family and each business are unique, so FBA works very closely with all the parties involved to customise each family constitution according to the unique characteristics and wishes of both the business and the family. The most important and commonly covered issues in the family constitution include;

  • Defining the strategic business objectives reflecting the agreed family values
  • How the family should be organised through family meetings and/or the family assembly and/or council and involvement of the next generation
  • Hiring and compensation of family members employed within the business
  • The process for resolving conflict between family members
  • Establishing the rule regarding the succession of family members
  • The process of nominating the family council

A good family constitution can sustain a family business for generations, it ensures efficient planning of the future and the prosperity of the family and the business.
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