Family businesses are often deeply rooted in strong values and traditions. On the one hand, these values can serve as a driving force that gives the company stability and long-term orientation. On the other hand, differing ideas about corporate governance, succession or the distribution of responsibility and resources can spark emotional conflicts between family members or clans. Such disputes, which are often emotionally charged, can jeopardise the long-term success of the company and even lead to its fragmentation.
Family businesses are therefore advised to take appropriate preventive measures to avoid conflicts and resolve disputes in order to ensure stable corporate governance. One effective option is to create a family constitution. This can serve as a moral and strategic guideline for the company and the family. Although a family constitution is not usually legally enforceable, as it often consists of declarations of intent and recommendations, it nevertheless offers significant advantages: it can serve as the basis for legal agreements such as inheritance, marriage, syndicate or partnership agreements and wills.
A family constitution can serve as the basis for legal agreements such as inheritance, marriage, syndicate or partnership agreements and wills.
Another key aspect of the family constitution is the possibility of establishing rules for dispute prevention and conflict resolution. For example, informal measures such as regular family days and committees can be established. In addition, formal mechanisms such as mediation, moderation or arbitration can be provided for in the family constitution. A clearly defined conflict resolution process with various escalation levels helps to ensure that the company remains capable of acting even in difficult times and that conflicts are resolved constructively before they escalate.
A precise and well-thought-out family constitution not only creates clear framework conditions, but also promotes acceptance and commitment within the family. It should always be drawn up in close cooperation with experts and agreed upon by the entire family. In addition, the family constitution should be reviewed and amended on a regular basis to ensure that it meets the current challenges and developments of the company.
This article concludes our four-part series on the topic of “Dispute Resolution”.
For in-depth insights into foundations, inheritance law, and corporate law, please refer to parts 1 to 3.
