The Key Reasons why Family Businesses Should Have Family Constitution

Problems can arise anywhere, whether in families or businesses. However, it is harder to solve problems when the family matters get involved in the business. Small accumulated problems can lead to a big issue in the future such as a fight for inheritance in the family, an unbalanced share of the benefits, or the unclear plan for the successor which can undermine family relationships.

However, have you ever noticed that the big family business like the Central Group Kingdom by the “Chirathivat Family” is reputed to be a family model that is successful in both family and business. This is because they have a common practice under the Family Constitution. ACU PAY will give you a detail of this. 


What is the Family Constitution? Why is it important?

The Constitution in ‘Family Constitution’ is the same as the Constitution which is the highest law of the country. In fact, these two Constitutions are similar in practice but the family constitution will be used in the family established it only.

Family Constitution is a memorandum of understanding on the planning and management of family matters and family business, such as vision and commitment, the rights and duties of family members, as well as the policy of working in family business.

At present, the family constitution is very important to the Kong Si business because it will set rules and conditions for working together with family members, as well as reduce problems for subsequent generations of members who will inherit the business.

Why should family businesses have the Family Constitution

It would be such a shame if many family businesses closed down, whether it’s age-related problems, miscommunication, the credibility of the younger generation, or a conflict of interests. This can be solved by planning a clear agreement early on. The reason why family business should have a family constitution is:

1. A tool to create clarity for business and asset management

The Family Constitution is a tool that creates clarity and transparency in both the management of business and property, whether it is remuneration, welfare, or retirement benefits for working and non-working members.

2. Help to build family harmony

Having a family constitution will create a joint agreement among family members. The members involved will participate and have the right and voice to create various agreements. Therefore, making a family constitution will create unity for everyone to participate in building an agreement and live together under the same guidelines.

3. Help lay the foundation for coping with family conflicts

Conflict is common in business, but it is often sensitive for family members. Small problems can become big problems that cannot be solved in the future. Building a family constitution is structured to deal with conflicts early when members are in good relationships.

The successful Family Constitution in Thailand

‘Chirathivat Family’ , the owner of Central Group Kingdom, is a good example of a family that is a model of successful business management under the Family Constitution because the family constitution is clearly written. From the beginning of the family business which imported magazines from abroad to sell during World War II, then traded for miscellaneous goods from overseas. Today, the business has been standing for seven decades, branching out both domestically and internationally.

3 Concepts of Business Management of Chirathivat Under the Family Constitution

  1. The business and family are separated. The family council takes care of family affairs while the board of directors takes care of business affairs.
  2. Use the Board system to communicate, decide, and resolve family conflicts.
  3. Family rules often reflect important values of the family. For the Chirathivat family, clear values are about sacrificing for the public, honoring elders, justice for sharing interests, and balancing between family lines when making decisions.

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ACU PAY Thailand

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