A Family Constitution (FC) serves as the cornerstone of unity, balancing the aspirations of the family with the needs of the business.
It is a master agreement of shared commitment by the family to govern the business. It represents the agreement of all family members about the rules and principles on vital matters of decision-making. A Family Constitution often guides various legal documents like wills or shareholder agreements, etc.
It helps Preserve Family Legacy by defining shared values and celebrating the family’s history and achievements.
It Promotes Transparency by replacing ad hoc /ambiguous decisions with explicit, mutually agreed policies.
It facilitates smooth Generational Transition by documenting the process, roles & responsibilities, as well as expectations through detailed deliberations among the family members.
Articulates the family’s mission and guiding principles.
Defines the purpose, roles & responsibilities, and membership criteria for various forums, such as the family council, family assembly, ownership council, family business forum, non-business family forum and other governance entities.
Establishes protocols for addressing disputes fairly and effectively.
Ensures transparency in financial matters, including profit-sharing and inheritance.
Describes the eligibility criteria for entry of family members into the business, eligibility of positions they can hold, compensation etc.
Outlines behavioral expectations, fostering a culture of respect and accountability.
Articulates the guidelines and process for supporting enterprising family members setup new ventures.
Defines the roles and responsibilities and the scope of involvement of various family members in charitable activities.
Provides guidelines to constitute committees / sub- committees for identifying development needs of various family members and arranging different educational/training programmes.
Living the Constitution effectively entails every family member upholding a shared commitment to cultivate trust, harmony, transparent communication, and demonstrating family values and fairness.