The recent developments unfolding in the Anchor Group dispute, with Mehul Shah emerging as the highest bidder for GreatWhite, once again underline a critical reality that when the inter se rights of promoters are not watertight or well-defined, control over the business itself can be at stake. In this case, the National Company Law Tribunal, Mumbai Bench (NCLT) had directed a structured bidding process to resolve disputes between family members, which entails one brother buying out the stake of the other in the company. The Ld. NCLT has appointed Justice (Retd.) Akil Kureshi to oversee the bidding process, and the next date of hearing is March 6, 2026.

Even today, a large number of businesses are significantly owned and controlled by families. While in previous decades, these businesses were structured as HUFs or partnerships, most large businesses have since corporatized, with several such companies even listed on stock exchanges.

Disputes among shareholders in family-owned companies frequently reach the NCLT under the provisions of the Companies Act, 2013. These entail grievances and claims pertaining to the company’s ownership, management, control and governance, including but not limited to:

• Oppression and mismanagement in the affairs of the company, filed by warring shareholder factions

• Control over the use of the family name

• Demand for the removal of Directors and reconstitution of the Board of Directors

• Share transfer disputes

The NCLT has wide powers under law to bring an end to the matters complained of, including but not limited to (i) the regulation of conduct of affairs of the company in future; (ii) the purchase of shares or interests of any members of the company by other members thereof or by the company; (iii) restrictions on the transfer or allotment of the shares of the company; (iv) removal of the managing director, manager or any of the directors of the company; and (v) termination, setting aside or modification of any agreement.

In several cases, Indian jurisprudence has treated family companies as quasi-partnerships and has, on many occasions, resolved these disputes by undertaking court-supervised forced buyouts with time-bound valuation exercises, restructuring of management and control, and even division of the companies and businesses between the warring groups.

However, dispute resolution can be time-consuming, disrupt corporate operations, may adversely affect business continuity, impact employee morale, erode stakeholder and brand value, and create reputational risks.

Family businesses can reduce risk by institutionalisation and setting governance mechanisms at an early stage, depending on the promoter group’s needs and circumstances. Some of these frameworks are as follows:

1. Family constitution: This is a structured charter outlining the family’s vision, succession roadmap, roles and responsibilities, and dispute resolution mechanism. Family constitutions play a significant role in aligning the family members’ interests towards the common principles of the family across generations and help in preserving harmony.

2. Inter se promoter agreements or shareholders’ agreements: These agreements serve as an effective mechanism for setting out and governing the rights and liabilities of the family members in their capacity as shareholders of the companies under their control. Such agreements typically regulate:

• Pre-emptive rights of members in terms of further capital infusion in the company

• Transfer of shareholding

• Exit mechanisms

• Deadlock resolution

• Non-compete, brand and name protection

• Dispute resolution

3. Trusts: In promoter-driven companies, family members hold controlling stakes in companies and such high-value shareholding forms a significant part of the family’s assets. Incorporating a private trust which holds the family’s shareholding, among other assets, enables the protection of these family assets through generations, while ensuring that monetary benefits from the same are enjoyed by the family members in a structured manner throughout their lifetime. However, it is crucial that trust deeds are drafted in a manner that ensures that the trust withstands time and is made keeping in view the needs and changes in circumstances across future generations, such as marriage, and change in commercial or personal aspirations.

4. Wills: A Will is an important instrument that deals with personal wealth and assets, after the demise of the testator. A Will can include shares of private and public listed companies. A well-drafted and properly executed Will reduces the risk of future disputes amongst family members arising out of the interpretation, validity and enforceability of the Will. In India, several recent disputes among high-net-worth families have centered on contested Wills, often leading to prolonged litigation and public scrutiny.

5. Family settlement agreements: Family settlement agreements are arrangements entered into among members of a family to amicably resolve existing or potential disputes relating to property, succession, and business interests, with the primary intent of preserving family harmony and avoiding protracted litigation. In the context of family-owned companies, these agreements also regulate ownership, management, and control by allocating shareholdings, prescribing board composition, delineating managerial roles, setting out succession plans, and imposing transfer restrictions or exit mechanisms. They may also address governance frameworks, dividend policies, dispute resolution mechanisms, and non-compete obligations to ensure continuity of business operations. Indian courts generally adopt a liberal approach in favour of upholding such arrangements, provided the settlement is equitable and not induced by fraud, coercion, or undue influence.

For promoter-led businesses, appropriate governance and holding structures have become paramount for risk management, legacy protection, and enterprise preservation.

About the authors: Tushar Ajinkya is the Founder and Managing Partner of ThinkLaw, advocates. Sukanya Sehgal is an Associate Partner at the Firm.

Disclaimer: The opinions expressed in this article are those of the author(s). The opinions presented do not necessarily reflect the views of Bar & Bench.

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