Governance

A family constitution is what gets written when a house has run out of the ability to answer that question one case at a time. It sets out who may join the business and on what terms, who owns what, who decides what, how someone leaves, and what happens to the ones who never come in at all. On its own it is unenforceable. In India it is a moral instrument. It binds nobody, and the families who find this out in year three find it out badly.

Its force comes entirely from what leaves it. A clause that stays in the charter is a sentiment. The same clause written into the Articles, or a shareholders' agreement, or a trust deed, or a will, is a thing a court will look at. Before any of it can be drafted, the family has to agree what it is deciding about. Most have never separated the three things.

His cousin's son is thirty-one and came in at twenty-four. He is not bad at it. He is not good at it either. Over seven years the plant has arranged itself around that, quietly and without unkindness. Approvals that go a slightly longer way round. A plant head who has never once said anything and never will. He has two daughters. The elder one started school this year.

Everybody is willing to draft the way in. A degree, three to five years outside at a company that did not have to hire you, an interview with someone who is permitted to say no. Those get written in an afternoon and everyone feels the family has been serious. Nobody wants to draft the exit. And the man the exit clause will apply to is sitting in the room while it is drafted, known to every person there and named by none of them. It gets written about nobody in particular. Six years later it reaches someone, and by then there is no person to be angry with. The same is true of the clauses about who married in.

While he holds control, the document is advisory. Everyone signing it knows that. Its real test comes after him, which is precisely when no one in the house is able to convene a conversation about what it meant. Two things decide whether it survives. The first is how much of it left the room. Provisions that sit in the Articles and the shareholders' agreement bite whether or not anybody feels like honouring them, and they bite because he signed them while he still could. The second is smaller and harder. Early on, something comes up that the document decides against him.

In the second year it is his wife's brother's boy. The one he said yes to in March. The rule is three years outside first, and the boy has done fourteen months, and there is a role opening in April that would suit him. No one argues. They are waiting to see, and every one of them knows that is what they are doing. He says the boy should finish the three years. Then he asks about the receivables, and the meeting moves on. It goes the other way more often. One setting-aside is enough, and afterwards no one says the thing is dead. They are polite about it instead. What outlives him is not the charter. It is whichever parts of it were put somewhere a court can reach.

Praveen Saanker sits with each of them alone first. Four months, sometimes six, and several conversations each. The rules worth writing are the ones drafted around a disagreement somebody found before any drafting began. He does not call the meeting either. If the founder convenes it, they hear him deciding something and the paper is his. If a son convenes it, they hear a move. The outsider proposing it removes the authorship, and that is the whole of what it is for. Then it is drafted, and argued over, and drafted again.

Version four goes round in June. His brother sends it back with one word circled in pencil and nothing written beside it. The word is permanently. It takes two more meetings, and in the end it comes out. His son-in-law reads the employment section twice and says it looks fine. The arguing is not an obstacle to the work. A draft that produced no argument was written about a family that does not exist. There is a cost to the method and it should be said. He will hear something in a private conversation that bears directly on a provision somebody else is arguing for, and he cannot use it. He cannot hint at it either. He can only put the question where the room might find it. Sometimes the room does not, and the wording goes in weaker than he knows it should. They do get written, and a good number of them hold. The ones that fail, failed because nothing ever left the room and nobody was ever seen to be bound by it. The ones that hold are the ones where somebody finally said out loud the thing the house already knew and had agreed not to say. Over two decades in institutional finance sits behind the instruments: Senior Vice President at HSBC India, then a founding-team Director of the family office practice at ASK Wealth Advisors. A doctorate in clinical psychology from the University of Canterbury sits behind the rest of it.

They signed it on a Sunday, at the dining table, because the office had felt wrong for it. Eleven signatures and two witnesses. His mother signed third, slowly, using the pen he had put down. Then he carried the copies upstairs to be scanned, because somebody had to, and the boy who does the scanning had gone home.