How In-Laws End Up Owning the Family Business

Part 2 of a 3-part series on the Family Shareholders’ Agreement

Family businesses often focus on who will inherit the company. Far fewer ask a more uncomfortable question: who might own those shares because of marriage?

Consider a family business built by a founder and transferred to his three children. One child marries, and the spouse gradually becomes involved in the business. Trust grows. The spouse receives shares.

At first, nobody sees a problem. The marriage appears stable. Years later, the marriage breaks down. The family is suddenly confronted with a question it never expected to answer: how does an in-law who received shares affect the family’s ownership, voting and control?

This is how ownership can move outside the bloodline—not necessarily through a hostile takeover or reckless decision, but through an ordinary family event: marriage. The issue is not that in-laws are inherently untrustworthy. Many spouses become contributors, advisers and stewards of family enterprises. The problem arises when family relationships and ownership rights are treated as though they were the same thing.

They are not.

Marriage can affect the property relationship between spouses, while corporate shares are governed by corporate rules. Families therefore need to consider these issues together rather than assuming that one document will solve everything.

Two instruments deserve particular attention: the Prenuptial Agreement, or PNA, and the Family Shareholders’ Agreement, or SHA. Under Philippine law, spouses may establish their property regime through marriage settlements executed before marriage, subject to statutory requirements. The PNA can be an important part of planning, but it does not by itself determine every corporate rule governing shares.

The SHA serves a different purpose. It can establish agreed shareholder rights and procedures concerning ownership, transfers, valuation, voting and related matters, subject to applicable law and the corporation’s governing documents.

This distinction is critical. A family business may want shares to remain within the family, but that principle needs an operating mechanism. Who has the first right to acquire shares? How are they valued? What happens if a shareholder wants to transfer them to a spouse? What happens after separation or divorce? What happens when a shareholder dies?

A Right of First Refusal can give existing shareholders an opportunity to purchase shares before they are transferred to an outside party. But transfer restrictions should not exist only as a private understanding. Where applicable, they must be properly reflected in the corporation’s articles, bylaws and stock documentation to have the intended effect against purchasers.

Succession raises the same issue. If a family wants ownership to remain concentrated among certain family members, it cannot simply assume that a founder’s wishes will automatically determine what happens to shares after death. Estate planning, the Will, corporate records and the SHA need to be considered together.

The most dangerous assumption is that “we are family” is itself an ownership strategy.

It is simply not.

Good governance does not require excluding spouses. It requires defining when spouses may participate, own shares or exercise shareholder rights. These conversations are difficult because relationships are strong. That is why they should happen before a marriage crisis, before a death or before a shareholder wants to sell.

The real goal is not to protect the business from the family. It is to protect the family from uncertainty about the business.

For those wanting to explore this further, Atty. Apollo “Pol” Sangalang and I will discuss the Family Shareholders’ Agreement and ownership protections at an onsite workshop on October 17, 2026, at the Makati Sports Club. You can contact Christine at 09173247216 for more information.

Prof. Enrique M. Soriano is Executive Director of W+B Advisory Group, Senior Accredited Director at the Singapore Institute of Directors and former World Bank/IFC Governance Consultant, advising family enterprises across Asia on governance, succession and stewardship.