Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Family business definition

What does Family business mean? In UK and Irish legal practice, a family business describes a business owned and/or controlled by members of the same family, often across generations. It is not a defined term in legislation or case law; it is a descriptive expression used across company, partnership, trusts and estates, tax and matrimonial finance contexts. A family business may operate through any vehicle: sole trade, partnership (including the Scottish partnership with separate legal personality), limited liability partnership (LLP), private or unlimited company, or a group, with ownership held personally or through trusts or family investment vehicles. Typical legal features include concentrated shareholdings, family directors,...

Family Businesses: Formalising Governance, Choosing Business Vehicles, and Drafting Effective Non-binding Family Charters

Published by a LexisNexis Corporate expert

Practice notes

Many family-run businesses often begin with a loosely defined governance set-up; relatives broadly recognise their responsibilities and how they relate to one another, and choices are taken swiftly around the kitchen table at home on a day-to-day basis.

By their very nature, these enterprises tend to be informal and adaptable, with objectives shaped by doing what is best for the family in line with its values, rather than solely pursuing the owners’ profit or commercial gain.

Yet, as the venture grows and more relatives and other employees come on board, managing the business in this manner becomes progressively harder as operations become more complex over time.

This Practice Note examines, in particular, the advantages and disadvantages of formalising the family business, selecting a structure for a family business, and family charters.

Formalising the family business—advantages and disadvantages

The principal benefit of an informal set-up for a family business is flexibility.

An informal structure enables family members to make swift decisions and gives them the freedom to run the business in whatever way they choose.

The most significant drawback is that numerous areas for dispute can arise, and the family members will have no procedures in place to help them resolve...

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Web page updated on 21/05/2026

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