David Clarke interviews Turcan Connell Tax and Succession Partner, Paul Macaulay on the services provided by our Family Business Team. Paul specifically discusses the offering of the Tax and Succession team, at Turcan Connell's offices (Princes Exchange, 1 Earl Grey Street, Edinburgh, EH3 9EE).

Paul Macaulay discusses the succession planning services provided by Turcan Connell's Family Business team.

For more information visit our Family Business pages on the website »

 

DAVID CLARKE

Hello and welcome to the Turcan Connell video cast on family businesses and succession planning. I’m David Clarke and I’m here with Paul Macaulay who’s going to talk about some of these issues. Paul the issue with governance is increasingly important. How does a family business manage having a family and having a business?

PAUL MACAULAY 

There’s an inherited complexity in family businesses because of the relationship between the family and the business. Often the key is to try and balance the interests of both and that can be down by a mixture of legal structure and government structure.

DAVID CLARKE 

So what do we mean about legal structure and government structure?

PAUL MACAULAY 

Well legal structure can cover things like how the business will be owned. For example, through a limited company or a partnership or through a trust, it can also set out voting mechanisms to balance economic interest which is often heard by a wide range of people who will expect some return from their interest in the business, with those holding control which will often be a much smaller group of people. The legal structure can also cover things like how the business will be run and how to protect minority interests and all of that can be covered through a shareholders agreement or partnership agreement, which our family business team can prepare.

DAVID CLARKE 

So the government structure is then a separate set of rule?

PAUL MACAULAY 

Yes, often the family will find that the legal structure is sufficient and they need something else to record their relationship between the family and the business and particularly to clearly record and define the difference between management and control of the business. Government structure can be as simple as setting out a policy for regular family meetings to ensure all interested parties have a voice. But it can also be more than that, it can cover policies about who can own shares in the business, which business decisions will be reserved to owners, things about dividend policy and also how interest in the business can be past on from one generation to the next.

DAVID CLARKE 

So, what’s the best way for the family to implement this government structure?

PAUL MACAULAY

Well all of this can be implemented by a way of a family constitution, which is a non-legally binding document setting up the families agreed policies and shared values. Unlike a shareholders agreement the family constitution can be signed up by all of the interested parties and not just the owners of the business. The preparation of a family constitution can be a lengthy process but going through and discussing openly the relationship between the family and the business from the outset can be an invaluable step and can mean that business changes in the future such as expansion and succession can be managed much more efficiently.

DAVID CLARKE

Paul thank you very much. So for more information on how Turcan Connell can help guide your family business. Go to the website turcanconnell.com or check us out on Twitter and LinkedIn