A charter or constitution is a vehicle to give all interested parties a voice and collectively they work together to set out their long-term goals and vision.
The process of creating a charter is based on many, in-depth discussions and debates – consideration is given to what can often be complex and challenging issues.
A family charter may cover:
A definition of the family i.e. does it include spouses, stepchildren, adopted children?
The purpose of the business? i.e. wealth generation, employment for family members, philanthropy?
Employment policy for family members
Experience and qualifications to sit on the Board
Communication policy between family and Board
How to deal with conflict?
The appeal of family charters has grown as families have become increasingly more complex, blended, extended and geographically separated.
To add into the mix some entrepreneurs who are still creating wealth may find it difficult to hand over control while a patriarch may want to maintain influence "from the grave". Often not all beneficiaries are directly involved in the family business while others will have very strong views on philanthropy and social advocacy.
It is not a legally binding document but charters often lead to the introduction of more formal documents such as a Shareholders Agreement, Pre and Post-Nuptial Agreements.
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