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Family Charters

The Family Charter (sometimes called Family Constitutions or Protocols) are statements of intent or agreements entered into by the family members in relation to the family business. A Family Charter is a formal agreement between family members regulating their conduct in respect of the family business and although not normally legally binding, parts can be legally binding if this is required by the family.

A Typical Family Charter

  • How the family want the business to be run
  • The goals and long term planning and strategy for the business
  • The family members’ different relationships with the business
  • How the family members should behave towards each other in the context of the business

We find that, rather like entering into a Shareholders’ Agreement, the process of working through the various elements of the Family Charter is, in itself, a very important and positive exercise for a family business to undertake.

Family Business Issues

The Family Charter can be a route map for both the business and the family moving forward.  It can also be a way of reaching an overall agreement on how a number of issues should be addressed in the future.  These issues can be whatever the family members think are relevant, but could cover:

  • Future employment for the Directors of the business.  Should these be from within the family or external Directors?
  • Who should be employed in the business?
  • What happens if somebody wants to sell their shares?
  • Should all family members be entitled to own shares regardless of their involvement in the business?
  • Should spouses and in-laws be entitled to own shares?
  • What happens if there is dispute between family members in relation to the business?
  • How does the family tackle a difference of views as to why the family are in business together or which direction the business should take?

The above list is not an exhaustive list and the things to be considered by each family business in the Family Charter will be unique to them. 

The benefit to the business can be significant.  We would also recommend that businesses that have a Charter should look to review and amend it on a regular basis to ensure that the route map is still the right direction for the business and the direction that the family members continue to wish the business to take.

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Frequently Asked Questions

He's got to keep a roof over our heads hasn't he?

Non-residential parents have to pay maintenance for their children; hopefully the amount can be agreed though negotiation and if not then the CSA will decide. Each case is different.   If for example the Mum and the children stay in the family home then she may relinquish her claims over any other assets such as pension and savings in return.

How soon can I file for Divorce?

There is a 12 month barring rule which means you can start the divorce process after being married for 1 year. In England you can get divorced if your marriage has broken down irretrivably, usually proved by allegations of adultery or unreasonable behaviour, or if there has been 2 years' of continously living apart.

My aunt only has one bank account. Can I deal with this on her behalf?

If the bank allows, it is possible for your aunt to name you as a third party on her bank account. This will allow you to withdraw funds and sign cheques on her behalf. We can help your aunt complete the mandate form required to put this in place.

What am I entitled to in a divorce? Can she take me for every penny?

No.  Sometimes it may feel as though this has happened. The aim when sharing out matrimonial assets is to be fair.  Both spouses have to make full disclosure about their assets and debts before any decisions can be made about distribution, trying to hide anything won't work.  Factors which are important when sharing out the assets include the current and future needs of each spouse and any dependent children; the length of marriage and the age, earning capacity and contributions of each party.

Will I lose touch with my children?

Your aim should be that both parents still play an active part in the raising of the child/children.  Usually parents sort this out amongst themselves, although if there are problems mediation can be a good way to resolve this.  Going to Court should always be the last resort where children are involved.

Will we have to go to Court during our divorce?

No, getting a divorce should be an administrative excersise only and there are many options open to you that avoid going to Court.

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Stephen Gordon
Stephen Gordon
Head of Business Legal Services
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