# Family Business Constitution & Governance

> A family constitution records how the family will own and run its business: who may work in it and how they're paid, how shares pass between generations, dividend and reinvestment policy, how decisions are made, and how members can exit or resolve disputes. It isn't itself fully enforceable, so its key terms are reflected in the company's articles and a shareholders' agreement.

Practice: Tax Planning & Business Advisory — https://www.industax.com/services/advisory/

Most family-business disputes arise at the second or third generation over roles, pay and exits. Agreeing rules early, while relationships are good, is far cheaper than litigation.

We facilitate the discussions, draft the constitution, and align the articles, shareholding and tax structure with it.

## Key facts

| Item | Detail |
| --- | --- |
| Covers | Ownership, roles, pay, dividends, exits, disputes |
| Enforceability | Through articles and shareholders' agreement |
| Bodies | Family assembly, family council, board |

## Who needs this

- Second- and third-generation family businesses
- Families with members inside and outside the business
- Promoters planning succession

## What's included

- Family discussions
- Constitution drafting
- Articles and SHA alignment
- Tax structuring

## Documents

- Shareholding and group structure
- Family tree and roles
- Existing agreements

## Process

1. **Listen** — Family views gathered.
2. **Draft** — Constitution agreed.
3. **Embed** — Legal documents aligned.

## FAQs

### Is a family constitution legally binding?

Parts can be, if drafted as a contract or reflected in the articles and a shareholders' agreement; values and aspirations are usually moral commitments.

### When should a family write one?

Before succession or when the next generation joins — ideally before disagreements arise.

### Does it affect tax?

Indirectly — decisions on holding structures, dividends and transfers of shares have tax consequences that should be planned alongside.

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Canonical page: https://www.industax.com/services/advisory/family-business-constitution
Publisher: Indus Tax — CA-led tax and compliance firm (https://www.industax.com). Contact: info@industax.com, 9059139258.
This is general information, not advice for your specific facts.