What is a Family Charter?

It is a statement of agreed values, aims and relationships regarding the business. It is very useful if there are more than two family members and also if there are any non-family members involved in running the business. Family members who are not shareholders can also participate in the Charter, for example if they have an interest by way of a family trust.

Why have a Family Charter?

It is a good exercise to determine the views of the various members of the family, and allows them to discuss and hopefully reach agreement of opinions.

What are the main questions to consider:-

What is the purpose of the business?

How do you see the business going forward in one, three, five and 20 years?

What is the policy regarding family involvement in the business?

How are you going to train and educate family members, so the business can get the best of their talents?

What will the Charter contain?

Each Family Charter will be different in the same way as each family and each business is different, but the main points that will be dealt with are long term strategy and aims.

How are main business decisions to be made?

The Charter should say how business decisions are to be made, (there may well be different classifications of decision depending on importance etc) as well as who can own shares, and what happens if someone wants to sell their shares.

Will it deal with employing, paying and appraisal of family members?

It should ideally contain the general policy in respect of paying dividends, educating and bringing into the business the next generation, procedures for resolving disputes between family members, and how to measure performance of those running and working in the business.

Is the Charter forever set in stone?

Absolutely not – flexibility is a good thing, and the Charter should be open to change and refinement to take account of changes in the family, the business and the commercial world

How can we help?

We can discuss with you the basic concepts involved in preparing a Family Charter and can assist with drafting and refining it.

For further information please visit our families in business page.

This bulletin is for general information only and does not constitute legal, investment or other professional advice. Please contact us should you require advice on any particular legal issue. Anderson Strathern LLP accepts no responsibility for any loss that may arise if reliance is placed on any information or opinions expressed in this bulletin.