37 COMMERCIAL LAW Institutionalization in Family Businesses and Family Constitution* Sevgi Ünsal Özden Introduction It is a well-known fact that the majority of companies operating in Turkey and around the world are family businesses, and few of these companies are able to transfer their assets to future generations. In order for a family business to successfully manage this, it is necessary and substantial to establish a solid corporate structure and to prevent conflicts which may arise between family members or at least to resolve them in a way that does not adversely affect the operation of the company. One of the most important steps that can be taken towards this goal is the preparation of a family constitution. In this Newsletter, the scope, content and binding nature of the family constitution are examined. What is a Family Constitution? The goals of the preparation of a family constitution are transferring a company’s operation, family mission, and values to the next generation, regulating relations between current family members and people who join the family later on, and regulating relations between family members and the company. Thus, a family constitution serves as a guide for future generations in terms of family values, principles, mission, goals and the roles of family members, and includes solutions for possible conflicts within the family. The family constitution is an atypical contract. It can be drafted in any way that the parties decide within the scope of the principle of freedom of contract set forth under Turkish Code of Obligations No. 6098 (“TCO”).1 There is no registration or announcement obligation * Article of July, 2021 1 TCO was published in the OG, No.27836, 04.02.2011 and entered into force on 01.07.2012.
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