Estate Planning
Charter for the family
The document that will help you protect both your business and your family
Are you interested in ensuring the successful management of your family business?
Family charters are documents that detail the duties and rights of family members in relation to the family business and can greatly assist the management of the business and its continuity.
Family charters are documents that detail the duties and rights of family members in relation to the family business and can greatly assist the management of the business and its continuity.
The objective is to improve the efficiency of business conduct while maintaining the family structure.
By Igal Mor, Adv. & Notary
Accuracy in Legal Advice. Excellence in legal support.
Among the topics covered in the family agreement are:
The business's goals and vision
As a first step, the family agreement outlines the goals and vision of the business. During the process of drafting the family agreement, meetings are held between all parties to coordinate expectations. This aspect of the agreement has great significance, especially since there is a vision gap between the founders of the company and the next generation, which will manage the company. It is at this stage that all parties can come together conceptually and develop a business plan that combines the goals of the two generations and contributes to the business’ maximum economic prosperity.
Terms and conditions of entry into the business and employment
Family agreements establish the criteria for entry into and exit from the business, or more specifically, the criteria that must be met for a family member to enter and work in the business, including his retirement for reasons of incompatibility or age. This agreement addresses the remuneration system for employees, share transfer arrangements, profit distributions, and other proprietary matters. It is important for the family agreement to also address the extent of the involvement and rights of family members who do not work in the business while creating a clear separation between them and those working there. Without these definitions, a deep family and business conflict may arise, causing harm to both the family and the business.
In order to prevent conflicts, decision-making mechanisms must be established
Having an organized, systematic, and clear decision-making mechanism in place in the business is essential in order to conduct business activities in a regular and efficient manner. In a family business, you have to separate the business relationship from family relations because the employees are also relatives. The agreement should include a reference to ways of resolving disputes so that disputes can be resolved as quickly as possible and business activities can continue in a normal and stable manner. Families may decide, for example, that if they cannot resolve disagreements, a process of mediation, arbitration, or majority vote will help them deepen and reach an agreement.
What is the best way to formulate a family agreement?
אמנה משפחתית נדרשת להתאים לסוג העסק, אופיו ומבנהו. Due to the fact that this is a document of intent for the future, all members of the family must be involved in its creation and hold the reins. In this regard, legal and organizational support should be utilized, while guiding the family members regarding the options available to them when formulating the essential principles that should be included in the agreement, all while accompanying them in the development of the agreement. It is a much simpler process than it appears.
Are you the owner or member of a family business? Concerned about business continuity? Maintaining family capital in order to prevent its transfer to third parties?
Mor & Co. law firm has an experienced family and commercial law department. Based on our extensive experience in handling family matters and commercial law, we make available to our clients our rich knowledge and expertise while remaining mindful of your interests, your family’s interests, and the family business as a whole.
For legal advice (without obligation) concerning family businesses – family agreements, the agreements that establish a balance in matters related to the management of the business, please contact us by phone at 02-595-3322 or by WhatsApp at 050-811-6181.
