Family feuds and fragile boards

India's corporate sector has long been dominated by family-run and promoter-controlled businesses.

- TULSI JAYAKUMAR

Over the decades, these businesses have powered growth, generated employment, and built household names. Yet, beneath this success story lies an uncomfortable reality — one where family feuds, opaque decision-making, and fragile boards increasingly threaten shareholder value and corporate governance norms.

Recent controversies surrounding companies like Raymond, Religare, and Hero MotoCorp only reinforce the urgent need for a new social contract governing promoter control in India Inc.

The distinctive feature of Indian capitalism is its promoter-led ownership model. In nearly 70 per cent of listed Indian companies, promoters control over 50 per cent of equity, often combining ownership with executive authority. While this alignment can ensure long-term orientation and swift decision-making, it also raises persistent governance risks. Minority shareholders frequently remain at the mercy of family dynamics, private disputes, and opaque board decisions.

Recent months have brought these concerns into sharp relief. Marquee Indian promoter-led companies like Hero MotoCorp have come under the scanner over alleged corporate governance lapses and fund diversions, while the Religare Enterprises episode has been marked by prolonged disputes within the founding family, criminal investigations, and boardroom upheavals. At Raymond, a public spat between Gautam Singhania and his estranged wife Nawaz Modi Singhania — a board member herself — spilled into allegations of financial impropriety, control over personal and company assets, and questions about board independence. While promoters continue to enjoy decisive influence in these firms, such controversies spotlight the difficulties boards face in asserting oversight and independence in closely held businesses.