Defining a family protocol is a fundamental step in organizing the relationship between family and business in a family enterprise. Through this instrument, agreements are established regarding ownership, succession, roles, and coexistence principles, seeking to anticipate conflicts and provide long-term clarity. However, it is important to recognize that the protocol, on its own, does not resolve governance challenges. Its true value depends on what happens after it is defined.
In practice, many organizations consider the process complete once the document is signed. However, experience shows that this moment actually marks the beginning of a more complex stage: implementation. It is in this phase that agreements must be translated into formal structures, operational mechanisms, and decision-making dynamics that function consistently on a day-to-day basis.
This transition — from definition to execution — determines whether the protocol becomes an effective continuity tool or remains a statement of intent. The following outlines the key elements that allow it to materialize into functional and sustainable governance.
Board of Directors
One of the fundamental pillars in protocol implementation is the creation or strengthening of a board of directors. This body is responsible for overseeing the strategic direction of the business, clearly distinct from operational management.
Building an effective board requires, first and foremost, an appropriate composition. While family member participation is natural — as they represent ownership — it is highly recommended to incorporate independent directors who bring experience, objectivity, and external perspective. Member selection should be based on capabilities and track record, not family ties.
Additionally, it is necessary to define clear roles within the board, establish an operating structure (including committees where appropriate), and ensure a regular working dynamic with agendas focused on strategic matters such as performance, risks, growth, and resource allocation.
When these elements are not properly structured, the board tends to lose effectiveness, becoming an informal or overly operational space. In contrast, a well-designed board helps professionalize decision-making, strengthen institutional capacity, and elevate the quality of corporate governance.
Legal Instruments
The family protocol establishes agreements, but for these to be valid and enforceable over time, they must be translated into legal instruments that support them.
Among the most important are shareholder agreements, which regulate relationships between partners; corporate bylaws, which must align with what is defined in the protocol; succession policies, which establish criteria for generational transition; and share transfer rules, which determine the conditions under which ownership stakes may be bought or sold.
In certain cases, it may also be necessary to structure additional legal vehicles — such as holdings, trusts, and Private Interest Foundations — to organize ownership and facilitate asset management.
Implementing these instruments requires the coordinated participation of legal advisors, tax experts, and strategic consultants, to ensure coherence between family objectives and business needs.
When this process is not carried out, the protocol remains a moral agreement without legal binding. Conversely, proper legal formalization reduces ambiguities, prevents conflicts, and provides greater stability in critical moments.
Family Assembly
Another key component is the formalization of the family assembly — understood as the institutional space where the family meets to stay informed, align, and strengthen its relationship with the business.
Unlike the board of directors, the assembly does not have a decision-making role over business management. Its functions are to inform, educate, and communicate; to convey the long-term vision, discuss relevant topics for the business-owning family, and involve the next generation.
For it to fulfill this purpose, it is necessary to define who participates (shareholders, immediate family, next-generation members), establish a frequency — generally annual — and design a structured agenda that includes results presentation, analysis of future prospects, and educational sessions.
One of the most frequent mistakes is the absence of these types of spaces or their confusion with operational meetings. This often leads to misinformation, divergent perceptions, and unnecessary tensions. In contrast, a well-managed assembly helps strengthen family cohesion, build trust, and ensure the continuity of the business project.
Governance Dynamics
Finally, the most decisive element in protocol implementation is the establishment of governance dynamics that work effectively in practice.
Beyond formal structures, governance materializes in the way decisions are made, conflicts are managed, and agreements are followed up. This means clearly defining what falls under the family’s purview, what belongs to the board, and what corresponds to the management team; establishing mechanisms to resolve disagreements; implementing performance evaluation systems — including family members involved in the business — and ensuring continuous monitoring processes.
One of the main challenges lies in closing the gap between what is defined and what is executed. It is common to find organizations where guidelines are correctly documented but not consistently applied. In these cases, governance loses effectiveness and problems resurface.
Conversely, when these dynamics are integrated into daily operations, the protocol ceases to be a static document and becomes a living tool that guides organizational behavior.
In summary, the family protocol sets the rules of the game, but it is governance that determines whether they are followed. Family businesses that successfully transcend generations are not those that merely document agreements, but those that develop the capacity to implement them in a structured and sustained manner over time.
If your family business is navigating this process, we are here to support you.
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Kryssia Madrigal, MBA Managing Partner Governance & Family Enterprises Bac & Asociados
