Shield minority shareholders from business family feuds

livemint.com:

All seems good when the parents are around. After their passing, human greed and jealousy seem to strain relations in many business families. The distribution of wealth and power within a family to everyone’s satisfaction is a universal challenge.

In many parts of the world, timely transitions from family-run to professionally managed businesses have helped mitigate such conflicts, driven in part by the fear of shareholder lawsuits. With nine-tenths of India’s publicly traded companies being family-owned or controlled, the complexity and pressure of keeping control of these businesses intensifies as families enlarge across generations. Family feuds can manifest in diverse ways, often beginning with minor disagreements among members over business strategies or priorities, often with personal egos at play.

However, seemingly trivial issues can quickly escalate into major disputes, fuelled by friction around inheritance matters or control of a majority stake in a listed corporation. The Securities and Exchange Board of India took a significant step last year by expanding the scope of disclosure requirements under Sebi’s listing Regulation 30A. It addressed the prevalence of undisclosed family arrangements within business groups that directly impact the operation and ownership of listed entities.