A protocol for family businesses

The family business in our country is one of the engines of the economy. However, this is not duly protected by legislation unlike other countries. It is said very often that the family business lasts very often until the third generation and from then on it tends to disintegrate, which is why tools that tend to their had should be sought.

The most frequent errors that occur in family businesses is the lack of delegation and recognition, which generates disagreement, resentment and when not grudges. The lack of communication also results in that not all its members are aware of what is happening in the company, for which mechanisms must be sought so that its members can know, either directly or indirectly, the progress of the company. company.

In order to avoid these issues and preserve the company, it is very convenient to create a family protocol that tends to anticipate the changes that inexorably occur within the family.

The family protocol is the instrument or document signed by the members of the family group that owns the company in order to resolve problems that may affect continuity, preventing conflicts and thus placing family relationships in a business context.

In other words, it is the framework document that defines family relationships, it is a guide and at the same time a commitment assumed by those who sign it for the future. And we say that it is a guide because it defines principles, commitments, rights and duties of each member of the group, in order to thus contribute to the generational transition and avoid future conflicts.

Obviously, the protocol cannot ignore the family history, its tradition, the different and varied origins, for which reason the protocol is not a rigid and static framework, but must have a great breadth and must include the particularities of each company, reason why each family business must realize its own protocol.

In short, it is the result of agreeing on multiple issues: legal, economic, succession and psychological.

What should a protocol contain? It is clear, as we have pointed out, that the family business as such in our country is not legislated or regulated, but not because it is not regulated or the incorporation of a protocol in family businesses is feasible. The protocol works in reality as a framework instrument to which the members of the family group must subject their behaviors.

As simply illustrative we can say that the protocol must establish the form of government and decision, the creation of a family council and a board of directors and must be included in the bylaws.

The employment policies for family members, their allowances, the retirement of founding members, the retirement of family members, changes in management and the possibility of opening the family should be specified. business to like-minded groups; how the shares or shares of the social capital will be transferred, either by inter vivos acts or by mortis causa transmission in order for the company to maintain within the family environment and avoid the presence of unwanted partners. It must also anticipate how the protocol can be modified so that it does not lose its validity, such as dividend distribution policies, formation of new litters and the appearance of family traditions.

As a summary we can say that the family protocol is a very useful tool, which facilitates the growth of the family business, avoids conflicts and allows the evolution and sustained development of the company.

*Founding partner of borda & erramuspe lawyers, family & heritage.