The Family Constitution or Charter is a statement of principles and purposes, roles and rules that is recorded and transmitted to all relevant parties. It is open to change and rewording, but it forms the foundation for shareholder unity across multiple generations and decades. It is a blueprint for how the company will operate at a professional level, its governance structures and internal policies.
In our experience, the Constitution can prove a difficult document to finalise, with many areas open to conflicting views. We find that by providing the family members with our objective, expert opinion and guidance, we can make this process much easier and more effective. The presence of a third-party ‘outsider’ can be very helpful in resolving arguments quickly and decisively.
Family constitutions are all about clarification – they provide clarity on a number of issues, principles and questions, setting out in detail the family’s stance on all issues of relevance and importance. The Constitution describes how the family and the business interact, outlines the policies that regulate family members’ relationships with the business and articulates the guiding vision, mission and values that describe the true purpose of the business from the family’s point of view.
In order to draw up the Constitution, we hold conferences with the family members – at your office, at one of our offices or at a neutral venue – and we guide the discussion on each matter of importance. We facilitate an open and honest examination of the family’s and the company’s primary beliefs, ambitions and goals, ensuring that every member has a voice and is heard. Issue by issue, we finalise the approach to each element, devising working policies that will inform and direct all decisions regarding the business.
By the end of this process, the members have a document that sets out clearly the rules and policies with regard to, for example, the introduction of in-laws to the business, what happens when a family member leaves the company, what happens in the event of a divorce, acceptable and unacceptable conduct, management structure, business and family governance, etc.
The Constitution provides the foundation stone upon which the business is built.
