Most Portuguese family businesses operate without any written rules governing the relationship between the family and the business. The family protocol exists to fill that gap: it is the document in which the business family sets out, together and in writing, the rules that will govern that relationship across the generations, from how relatives join the company to how ownership is passed on.
It is neither a contract imposed from outside nor a formality to be filed away in a drawer. It is an exercise in corporate governance applied to the most delicate terrain of any family business: the overlap between emotional ties, wealth and decision-making power. The articles of association regulate the company and contracts regulate its business dealings; the protocol regulates what no other document covers, namely how the family behaves as owner of the business.
Experience shows that families who do this work reach the second and third generations with more predictable transitions, fewer open conflicts and a far greater ability to attract and retain professional management.
What a Family Protocol Is
The family protocol is a framework agreement signed by the family members connected to the business, both current and, in many cases, future. It combines principles (the family's vision for the business, the values it wishes to preserve) with concrete operating rules. It is distinct from the company's articles of association and from shareholders' agreements, but it does not replace them: it works alongside them. The protocol is the reference document; the legal instruments are its technical translation.
It is also, by its very nature, a living document. A family grows, marries, divorces, and produces heirs with different paths and ambitions. A good protocol provides for its own periodic review rather than pretending it can anticipate everything.
What It Typically Governs
Every protocol reflects the family that writes it, but certain matters appear in virtually all of them:
- Relatives joining the business: objective admission criteria, such as minimum qualifications, professional experience outside the group and assessment under the same rules as any other employee.
- Remuneration: family members' salaries set according to the role performed and market practice, not the personal needs of each branch of the family.
- Dividends: a clear distribution policy that balances shareholder returns with the reinvestment the business needs.
- Succession in leadership and ownership: who may succeed, how they are prepared, over what time horizon and with what support.
- Transfer of shareholdings: pre-emption rights, criteria for valuing quotas (the ownership units of a Portuguese private limited company) or shares, and exit rules for anyone who wishes to sell.
- Family governance bodies: the family council, the family assembly and the boundary between these forums and the company's own governing bodies.
The value of these rules lies not only in their content. It lies in the fact that they were discussed and accepted before they were needed, while no one yet knows which side of the rule they will stand on.
A family protocol does not eliminate conflict: it anticipates it. And a conflict settled on paper, calmly, always costs less than the same conflict settled in court.
Legal Force and the Force of Commitment
It is worth being precise on this point: the family protocol, as a single document, carries above all the weight of a pact of commitment. Many of its clauses bind the family morally but are not directly enforceable before a court.
That does not make it decorative. First, because a commitment made before the whole family genuinely weighs on how each member behaves. Second, because the clauses the family wishes to make binding can, and should, be carried over into the appropriate legal instruments: the company's articles of association, within the limits of the Portuguese Companies Code (Código das Sociedades Comerciais); shareholders' agreements; wills and gifts of quotas or shares, including gifts with a reserved usufruct, which allow ownership to be transferred early while the outgoing generation retains income and voting rights; or a structure at the top, such as a family SGPS (a Portuguese holding company), which centralises the shareholdings and organises how the various branches of the family relate to the group.
Transfers of shareholdings carry tax implications that vary with the instrument chosen and each family's circumstances. Any serious protocol therefore includes a case-by-case analysis, with specialist legal and tax advice, before the route is fixed.
How a Family Protocol Is Built
A protocol bought off the shelf as a template is not worth the paper it is printed on. What gives the document its force is the process that produces it. In practice, that process runs through four phases.
1. Diagnosis
Individual interviews with family members, to understand the expectations, fears and disagreements that are rarely voiced in a group setting. This is where you identify what the protocol genuinely has to resolve.
2. Facilitated Discussion
Joint sessions, led by an independent third party, in which the rules are debated until genuine consensus is reached. An external facilitator allows the difficult questions to be put on the table without anyone having to raise them against a sibling or a parent.
3. Drafting and Legal Transposition
The consensus is set down in the text of the protocol and, in parallel, in the instruments that give it binding force: amendments to the articles of association, shareholders' agreements, deeds transferring shareholdings. This is the phase in which the case-by-case tax analysis should take place.
4. Periodic Review
The protocol sets its own review cycle, so that it keeps pace with the family and the business rather than becoming obsolete at the first significant change.
As for the right moment: before it becomes urgent. The worst context in which to write rules is one where conflict has already taken hold, or where succession has been forced by the founder's illness or death. The best is one where the next generation is beginning to approach the business and there is still time to decide calmly.
At Ravina Promissora, we support business families in preparing their family protocol: we conduct the diagnosis, facilitate the discussion sessions and align the legal and tax work with the company's strategy. If you are thinking about the continuity of your business, explore our work in business succession or reach us through our contact page. The purpose of the initial conversation is precisely to establish whether this is the right instrument for your family.