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Law for Business

Knowhow - guidance - precedents

29 JUL 2015

Family Charters - what is all the fuss about?

Family Charters - what is all the fuss about?
Emma Rudge
Senior Associate, Veale Wasbrough Vizards

In our last article we identified family charters as one of the key documents that family businesses should consider putting in place.

The family charter is the main document in which the family sets out its values, vision and commitment to the family business. It also contains the family's position on key issues such as who can own shares in, or work for, the family business.

Why have one at all?

You may be reading this and thinking that whilst this is all very interesting, it doesn't apply to you - perhaps you feel your family and/or business is too young or too strong to need one. Conversely, perhaps you feel that relationships are already too acrimonious for the family to consider working together on a family charter.

Taking each of the reasons outlined above in turn:

Your family and/or business is too young or too strong to need a family charter

Much of the value in having a family charter is in the process of putting it together. This process provides the business owning family with a structured mechanism to debate the main questions and challenges that are likely to cause difficulty and conflict in the life of the family business. Family charters are a catalyst to communication. They provide an opportunity to discuss difficult issues in a calm and measured way, when the family business is functioning well. By discussing key questions and issues in advance, it also means the family is much better equipped to navigate any challenges if and when they do arise.

Relationships are already too acrimonious for the family to consider working together on a charter

Where relationships are already too difficult or other challenges have arisen, there is often much to be gained from the process of putting together a family charter. However in this scenario it is critical that the family seeks outside help in putting together a charter.

An objective and experienced family business consultant can help the family to start the process of constructively discussing the issues that they face. The process takes time (often years) and requires the buy in of all the key stakeholders.

However, the completion of the project leaves families feeling extremely proud of what they have achieved - they have a new way of communicating with each other and have demonstrated that they can work together to achieve their goals. If and when any further challenges arise the family can always then look to the family charter to guide them.

Putting a family charter in place

A family charter is not a one size fits all document. It can range from:

  • in its simplest form - a statement of two to three key values
  • in its more complex form - a lengthy document containing key principles on everything from transition between generations, employment policies and statements on philanthropic giving
  • everything in between
In order to get started, you need to discuss this with the other key family stakeholders and get their buy in. If you feel you need outside help, find a consultant that you feel is a good fit with the family and can work with you to guide you through the process.
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