Family constitution

A family constitution, also called a family protocol or family charter, is the main written document of family governance. It records how the family intends to manage its relationship with the business, usually drafted over several meetings with the help of a family business advisor.

A family constitution usually covers:

• Values and purpose: why the family owns the business together.
• Governance: the roles of the family assembly, the family council and the board, and how members are chosen.
• Family employment: who may work in the business and on what terms.
• Ownership: principles for who may hold shares and how they may be transferred.
• Conflict: how disagreements are raised and resolved.

Is it legally binding? Usually not on its own. Most family constitutions are statements of intent. The binding rules sit in legal documents such as the shareholder agreement and the company’s articles. Families that want parts of their constitution to be enforceable should work with their lawyer to reflect them in those documents.

Family constitution or family charter?

The terms are often used interchangeably. Where a distinction is made, a family charter can mean a shorter statement of values and principles, while the constitution is the fuller document. Practice varies, so it is worth checking what a particular advisor means.

Why it matters for the successor

A constitution sets the rules for the whole family over many years. It rarely says anything specific about how one leader hands over to the next: which decisions move, when, and how the two generations disagree in public. That narrower agreement is the job of a handover charter. Family constitution vs handover charter explains how the two fit together.