Family Constitution
and Corporate
Governance

We plan the institutionalisation of family businesses and their transfer across generations, with the legal framework to match.

SCH-Legal supports family businesses through the institutionalisation process by defining the ownership structure, management and decision-making mechanisms and the roles and powers of family members within the company. The existing structure is analysed through interviews with founders and family members, and a family constitution is prepared in line with commercial, contract and inheritance law.

Alongside the family constitution, shareholders’ agreements, amendments to the articles of association, the working principles of the family council and the board, and shareholding and transfer rules are drafted; the transfer of the company to the second and third generations is planned together with its inheritance and tax aspects.

What we do

Analysis of the ownership and management structure
Family constitution and family council working principles
Shareholders’ agreements and articles of association
Succession and inheritance planning
Dispute resolution mechanisms within the family

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Frequently asked questions

Common questions on family constitutions

Ownership, succession and management in family businesses.

Is a family constitution legally binding?

Not on its own. A family constitution is a consensus document setting out the principles of the family’s relationship with the company. It becomes binding when those principles are carried into a shareholders’ agreement, the company’s articles of association and, where needed, inheritance agreements.

Note too that a shareholders’ agreement binds only those who sign it, not the company. That is why we plan from the start which rule goes into which document.

How can we keep company shares from passing outside the family?

Several tools are used together: provisions in the articles of association restricting share transfers, pre-emption and buy-back rights in the shareholders’ agreement, and an inheritance agreement or will for transfers on death. Each tool comes into play in a different situation, so they need to be designed to work together.

Our children don’t want to work in the company. How does it carry on?

A family constitution answers this by separating ownership from management. Family members remain shareholders while the company is run by professional managers. The conditions for family members working in the company, the dividend policy and the relationship with management are set through the family council.

It is far easier to have this conversation while the founder is alive and the company is doing well than later on.

How does the corporate governance process begin?

With an analysis of the current structure. We meet the founders and family members one by one and listen to their expectations and sensitivities. The family constitution and the legal documents tied to it are written after these meetings. How long it takes depends less on the documents than on how quickly the family reaches agreement.

What happens when a disagreement arises within the family?

A well-drafted family constitution sets out a step-by-step route for disagreements: first discussion in the family council, then an independent mediator, and as a last resort arbitration or the courts. Having this route agreed in advance keeps the disagreement from spilling over into the company’s day-to-day running.