What a family charter is, and what it is not

A family charter is a written record of how a family has agreed to hold and govern what it owns together. It commonly covers the family's purpose, who counts as family for the purposes of ownership, how the family's own forums work, what those forums may decide, and how the family expects to handle the questions it knows are coming: entry into the business, pay, and what happens when someone wants to leave.

What a charter is generally not is a contract. In most arrangements it is a statement of intent between family members rather than an instrument a court would enforce, which is why it sits alongside the shareholder agreement and the company's articles rather than in place of them. The distinction matters at the only moment it is ever tested.

The most common failure is not a badly drafted charter. It is a charter that says one thing while the articles of association, drafted years earlier by different advisers, say another. Neither document is wrong on its own. Together they give two branches of a family two defensible positions.

A charter is also the one part of this work that cannot be delegated. A document drafted for a family it has not spoken to is a document the family will not use.