Safeguarding your legacy: a key takeaway for family businesses from the sale of Royal Mail

Posted: 19/05/2025

Following months of speculation, the UK government has recently given the go-ahead for the sale of the parent company of Royal Mail; an historic UK institution dating back to the reign of Henry VIII. With the sale of this national icon to the non-UK EP Group, it is not surprising that the government has imposed some 'strings' as a condition of its approval. It is understood that the government will retain a 'golden share' in the company, ensuring it retains significant control in areas considered to be of vital importance to the country over the coming years. For family-run enterprises, this arrangement is a timely reminder of the need for, and methods of, safeguarding their legacy and how this sort of planning can be utilised.  

The government's oversight of Royal Mail is expected to be achieved by the creation and issue of a new share class within its holding company.  The articles of association (the documents which govern the company) will reserve various powers and interests to this special share class; ensuring the government retains a measure of control over certain decisions.   

The same principle – maintaining control – is a cornerstone of planning for family businesses and family investment companies (FICs). Whether established to run a multi-generational business, to maximise family investments and/or to manage the gradual succession of family wealth, a company structure is increasingly used by families to keep critical decision-making within experienced hands and as a means of imposing asset protection measures. Key players – typically patriarchs, matriarchs or the trustees of a family trust - frequently hold a 'golden share' (or by similar control/voting mechanism), separate to the shareholdings that carry dividend rights and the capital growth of the company. We are seeing these arrangements growing in popularity due to their ability to blend flexibility with long-term control, especially in safeguarding wealth created by family-run trading or investment businesses. 

An FIC is a private limited company tailored to meet a family's estate planning goals. With bespoke articles of association, a FIC enables families to manage and grow wealth across generations while maintaining control in a flexible and structured manner. From a private client perspective, FICs offer a way to transition wealth in a controlled environment – allowing the senior generation to retain influence while the next generation gains exposure to the business or investment activity, without having immediate access to significant capital. 

FICs can range from relatively simple, 'vanilla' structures to more complex and bespoke arrangements. The articles of association can be customised to address governance matters and shareholder rights, restrictions on share transfers outside of the family in the event of divorce or death, and even requirements on how the company is financed.  The precise terms will depend on a family's circumstances, particular risks or concerns and the nature of the family business. Whilst similar protections are offered through the use of trusts, these can be more limited in some circumstances and carry adverse inheritance tax implications, especially if they are established during one's lifetime. 

In the context of Royal Mail's sale, it is understood that one of the rights reserved to the government will be its approval of any future sale. 

When establishing or adapting such companies, different share classes may be created for different members or branches of the family, each with varying rights to dividends, capital, or voting power. These companies are typically funded through a combination of capital contributions and shareholder loans – often repaid over time, providing a tax-efficient means of extracting value in future. 

Although the value of any retained shares or loans will be included in a shareholder's estate for inheritance tax purposes, capital growth can be assigned to the shares that are gifted to the next generation, as part of an individual's wider tax and succession planning. 

FICs are therefore a compelling option for families looking to preserve and manage wealth derived from trading or investment businesses. Whether used alongside or instead of trusts, they offer control, flexibility and a tax-efficient approach to multi-generational planning – backed by a clear legal structure and the capacity to adapt to a family's evolving needs.  

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