Sample of Family Constitution

Topic Interpretation Tasks to be done

Definition of Family Who do you define as  Define your family
family? Only bloodline or
include brother(s) and
sister(s) and their
children.
In terms of this
constitution, family is
defined as blood family
and everybody closely
associated with blood
family (e.g. children of
bloodline parents). Non-
bloodline family members
will be appointed on
merit and only on an
employee/employer
relationship.

Advisory Board Who is a member on the  Put down the

Advisory board? The names of your
Advisory board should advisory board and
have a person from what your business
outside your industry on expects of
the board that you trust everyone.
regarding his/her  Include a person
business acumen. outside of your
business on your
board.

Shareholding within the Who may have shares  Define

business and who may have shareholding within
access to shares in the the business
business?  Define whether
employees may
also have access to
shares (maybe
through employees
trust)
Management philosophy Our major priority will be  Strategic plan for
and objectives to balance family and business – e.g.
business interests. Our December
company management  Formalise all
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Topic Interpretation Tasks to be done
will combine the highest visions – e.g.
ethical and business September
standards.
By following this
philosophy, we believe
the business will continue
to grow moderately and
to diversify from a strong
basis in this sector.
Therefore, all decisions
will be taken based on
factual analysis and
advice from outsiders
(minimising emotions).

Jobs for family and their Entry into the business  Profile family
remuneration will be an opportunity, members/decision
not birthright. makers (Myers
Family members will be Briggs) by date
employed in positions for (e.g. December)
which they have the  Performance
appropriate qualifications contracts must be
and experience. If their in place for
performance consistently everyone –
fails to meet including family
expectations, they will be members
requested to leave.  Salary scales –
All appointments and finalise by e.g.
retrenchments will be September
managed by a majority  Training needs and
decision of the Advisory programmes – e.g.
Board. Family members September
employed in the business
 Job descriptions –
will be remunerated
e.g. October
according to market
related structures.  Emotional
Incentives will be intelligence – e.g.
provided where September
expectations are  Personnel policies
exceeded. (State for family members
incentive e.g. exceeds – e.g. November
expectations with at least
10%).

Leadership The next Executive  Structures to be

Chairman will be selected put into place –
on the basis of e.g. December
professional competence,
as well as the following
considerations: a proven
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Topic Interpretation Tasks to be done
track record; leadership
qualities; the ability to
command respect
amongst employees and
family members; a vision
for the company’s future.
Any additional chief
operating officers of
strategic business units
would not necessarily be
family members.
The Advisory Committee
will appoint the Executive
Chairman as well as
other CEOs.

Communication We acknowledge the  Advisory board

importance of open meetings – first
communication and will week in December
respect the opinions of  Operational
other family members, meetings – weekly
even if we do not agree
 Family council
with them. In the event
meeting –
of disagreement, we
December
commit to constructive
resolution within the
shortest possible time
that places the best
interest of the company
and the family over our
own preferences.

The following formal

meetings will be held to
facilitate open
communication:
 Advisory Board
meetings twice a
year in March and
September. These
meetings will focus
on strategic issues.
Communication  Operational
(Continues) meetings once
every week on
Thursdays at
 09:00 - These
meetings will focus
on operational
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Topic Interpretation Tasks to be done
activities.
 Family council
meetings once
every two years
during a full family
gathering. These
meetings will focus
on family matters
affecting the whole
family.

All meetings will be

formal meetings where
decisions are taken on a
75% consensus basis.

Advisory Board In order to provide  Identify people,

objectivity, expertise, test whether
experience and guidance, interested, get
non-family directors will CV’s – end of
be appointed on the October
board and will be  Meetings: March
remunerated according to and September
a fair system for their
 Obtain
involvement. All family
remuneration rate
board members will be
for non-family
required to hold a
directors
management position in
the company and must  Director’s training
be at least 25 years of at first directors
age. Outside meeting -
professionals regularly December
retained to provide
services to the company
should not be board
members. Bloodline
family members not on
the board will be
permitted to ask
questions or make
suggestions for board
action to the board, and
Advisory Board the board will endeavor
(Continues) the respond to such
requests promptly.

The board will take

responsibility for the
strategic management of
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Topic Interpretation Tasks to be done
the company and resolve
any conflict amongst the
family on business
issues. The board’s
decision will be final and
binding on all.

Employees: Non-family We are committed to the  SETA – Learnership

continuance of an training - October
environment that values
the contribution of non-
family employees, treats
them with respect, and
provides them with
appropriate rewards and
benefits.

Changes to constitution The Advisory Board will  Signing of

formally review the constitution -
family constitution every December
year. Any family member
older than 25 years of
age may recommend
changes by submitting it
in writing to the Advisory
Board. While we
acknowledge that this
document is not legally
binding, we will support
the constitution and
encourage our children to
do so.