Succession Plans for Listed Companies in India: A Case Study

Family businesses account for 70% of India's GDP, with around two-thirds of the top 500 listed companies by market capitalisation being family-led, a percentage  projected to rise to 85% by 2047. Listed companies in India have controlling shareholders classified as ‘promoter’ and ‘promoter group’, typically founders or legal persons who have predominantly inherited businesses through different succession models. 

A 2025 Barclays and Hurun India report found that 76% of the most valuable family firms are run by second-generation leaders, while a 2025 HSBC Entrepreneurial Wealth Report revealed that 79% businesses have family-oriented succession management plans. In this context, we review the existing governance frameworks with current ownership structures and focus on the enforcement of instruments such as family settlement agreements or constitutions through examples of the top ten listed entities at the National Stock Exchange.

Ex Ante: Regulation

India has a layered corporate governance framework for succession. 

The Companies Act, 2013 (CA 2013) mandates a Nomination and Remuneration Committee (NRC) to identify qualified persons and formulate succession criteria for key managerial (executive/ non-executive) appointments. Under the applicable securities law, a board of directors (Board), based on the NRC criteria, confirm and disclose succession related events. 

Typical succession plans identify and periodically reassess key managerial position appointment tenures, set talent development policies, provide emergency protocols specifying interim leadership arrangements, and include treatment of related party transactions through share transfers. The Indian takeover code prescribes thresholds for mandatory open offers and provides limited exemptions for inter se transfers among promoters and family members as ‘control’ retention measures, particularly for transferring assets among connected or associate companies. 

As reform, independent directors are intended to serve as a transparent and efficient measure but suffer implementation scrutiny. A 2019 Report found that independent directors commonly receive proposals through promoter recommendations or  do not have real management powers and resign during governance failures, as is the case of  Jet Airways. 

Ex Post: Governance 

Structured succession planning is not an inherent market feature in listed entities, absence of which prompts disputes addressed through ‘family settlement agreements’ or question enforceability of family constitutions.   

Family constitutions are typically enshrined in a company’s articles of association (AoA) for enforceability in shareholder or ownership disputes. In the Murugappa Group case, the entity adopted a family constitution, where the Indian companies tribunal confirmed that a non-statutory constitution cannot override rights under CA 2013 and must be clearly embedded in the AoA since effective governance depends on the AoA. Internal frameworks such as Mahindra & Mahindra’s Succession Plan or the implementation of NRC-designed succession plan are available examples of good governance practices. 

In cases of family settlements, as laid down in Kale and Ors. v. Deputy Director of Consolidation and Ors., a family settlement agreement must be genuine, voluntary, registered, made in good faith and binding in nature. Important precedents also include: the TVS Group demerger through a scheme of arrangement, ring-fencing promoter control and the Godrej settlement with promoter reclassifications, segregating family held and listed company assets. Lastly, to establish promoter-company separation, a protectionist approach, settled through Reliance Natural Resources Ltd. v. Reliance Industries Ltd., which held that a private family memorandum of understanding cannot move corporate assets or bind a listed company, is an established position. 

Thus, the enforcement environment is often reactive rather than proactive, and succession events, raise significant concerns for the market at large.

Trust Holding Structures 

Indian listed entities also consolidate holdings through private trusts or a novel Hindu Undivided Family (HUF) trust structure. Promoter or promoter group-controlled entities increasingly use private trusts to consolidate holdings and manage intergenerational transitions, with multiple promoters holding shares through a trust consolidate voting power and influence outcomes. The HUF holding structure, unique to Indian personal law, allows ownership of assets and shares. Voting power of HUF held shares is not transparent to public shareholders and is held under independent confidential trust deeds. This creates challenges, particularly during disputes, as control may be exercised through such trust shareholdings. Trust structures operate as private mechanisms within listed companies, and their governance implications remain an open question.

Conclusion

Disclosure-based regulatory interventions have not ex ante addressed the reduction of transaction costs and management disruption in family held enterprise disputes. An AoA based family constitution model, or an integrated succession policy would prove to be critical to streamlining successions in large Indian conglomerates. Other features can include succession-related covenants in AoAs, defined transition management protocols, involvement of independent external advisors, and establishing dedicated planning policies that are distinct from the general NRC charter. Independent directors have limits in promoter-controlled environments but have assumed a mediating role in family succession disputes or minority shareholder cases and exits. 

With respect to formalising succession, in Tata Consultancy Services v. Cyrus Investments, the Supreme Court emphasised that incorporating charter provisions in AoA must rest on corporate history and conduct, not on extra-corporate expectations. Further, Indian courts and tribunals will not enforce a non-binding constitution over statutory processes for director appointments and other managerial decisions. 

For corporate longevity, controlling shareholders often view themselves as long-term stewards, with intergenerational interests aligned with company performance which may result in oppression and mismanagement issues, governance failures and risks of wealth expropriation. Thus, once a succession event crystallises, disclosure of control and succession arrangements is pivotal. In India, despite disclosure requirements, trust structures and layered ownership can obscure effective control even in listed entities subject to higher disclosure thresholds. Singapore and Indonesia, which require identification of ultimate beneficial owners, offer one possible approach for India. 

In the current market, succession planning is central to balancing competing considerations. Adequate ex ante measures such as: strengthening NRC based plans and enhancing the enforceable role of family constitutions in AoAs may be considered as a way forward. 

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Dr. Shardul S. Shroff is the Executive Chairman at Shardul Amarchand Mangaldas & Co.

Ishana Tripathi is the Director of Research and Innovation at Shardul Amarchand Mangaldas & Co.

Dharmil Doshi is a Research Fellow at Shardul Amarchand Mangaldas & Co.

This blog is based on a paper presented at the Asian Corporate Law Forum 2026. Visit the event page to explore more conference-related blogs.

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