All matters relating to the Family Protocol are topical, as there are always companies with partners from the same family. Before delving into the various aspects of the Family Protocol, it is essential to define what it is exactly. In simple terms, we can define the Family Protocol as a framework agreement signed by the partners within a company made up of members of the same family with the purpose of establishing the rules of the game that facilitate decision-making, preserve family relationships and ensure the proper development of the company.
According to the study “Family businesses and the challenge of innovation” (Cruz & Santaló, 2022), carried out by the Instituto de Empresa, approximately 89% of private companies in Spain are family businesses. Despite their significant contribution to the economy, there is no specific law regulating the particularities of these businesses. For this reason, it is essential that the partners themselves are responsible for anticipating conflicts and ensuring the smooth running of the company.
This objective can be achieved through the drafting of the Family Protocol, which can address a wide range of issues, amongst which the following stand out:
- Establish a mission, principles and values that unify objectives and foster collaboration among partners.
- Define the process for electing and composing the company's governing bodies, establishing majorities for important decisions. On occasion, additional control bodies not provided for in legislation may be created, such as the family council.
- Define criteria for the inclusion of family members interested in working in the company.
- Implement preventive measures to address situations of deadlock and disagreement, promoting understanding among family members.
- Establish rules for the transfer of shares or holdings, determining when and to whom they may be transferred, with the aim of protecting the company from the entry of new shareholders outside the family.
- Provide for the right of withdrawal, specifying both the grounds and the procedure for carrying out the division of the company when the time comes.
These are examples of elements that can be included in a Family Protocol, although the possibilities are almost endless. The creation of a Family Protocol requires a careful analysis of the company itself, the business, the environment, the owning family and the main relationships and/or aspects to be regulated, as well as a review of applicable legislation and case law.
The protocol only binds the parties that have signed the document. Therefore, situations may arise where, despite having a signed Family Protocol, certain aspects are not fully applicable due to a lack of effectiveness against non-signing third parties, hence the importance of establishing sufficient legal mechanisms to ensure this effectiveness.
As can be seen, the protocol makes it possible to anticipate and address future situations and problems, avoiding conflicts that could leave a significant economic and emotional footprint. The drafting of a Family Protocol is a complex matter that has a significant impact on the future of the company. For this reason, it is essential to seek appropriate advice from experienced professionals in the field. At BUSQUETS, we are available to provide you with the necessary guidance. Do not hesitate to contact us if you wish to delve deeper into this subject; we will be delighted to help you with whatever you need.
[1] Cruz, C., & Santaló, J. (2022). Family businesses and the challenge of innovation. Ernst & Young. Retrieved from https://static.ie.edu/fundacion/pdf/Informe_Empresa_Familiar_IE.pdf