
Can and able: Business families like the Lodhas can fight, but should be able to pay for it

Summary
- It’s not just Lodha versus Lodha. Business family feuds have grown common, but their cost must not burden other shareholders. Perhaps regulators should step in.
Family feuds have long been a staple of human drama. From ancient Indian epics to Shakespearean tragedies, tales of siblings battling over legacy, power and name continue to captivate audiences. But in the corporate arena, where legacies aren’t confined to royal palaces but spill into the public space, the stakes rise sharply.
The latest Lodha versus Lodha saga is yet another reminder that while families can create dynasties, they are equally adept at tearing them apart. Indian corporate history offers no dearth of examples of family-name disputes. From the Ambanis and Bajajs to the Modis and Kirloskars, the script remains eerily similar: families have built fortunes together, only to squabble over them later.
Also Read: Lodha vs Lodha: Why family names as brand names are always tough to disentangle
But what often escapes scrutiny is the fallout on the businesses involved. And while such spectacles make for juicy boardroom gossip, they pose an uncomfortable question: At whose cost do these battles rage?
The reality is that families may build great companies, but they often fail to separate their personal identities from their professional roles. For family-run businesses, a name is not just a name. It’s a brand, a promise of trust, and, ironically, often a seed of discord. But the public perception of a glamorous courtroom showdown, with one sibling accusing another of poaching a surname, obscures the real victims of this drama—other shareholders.
The silent majority of minority investors often find themselves becoming the collateral sufferers of family vendettas. Why should their investments be dragged into private battles of ego and wealth?
The costs of such disputes are insidious. Legal battles bleed companies financially and reputationally. Boardroom distractions often result in lost opportunities as management attention shifts from strategic priorities to firefighting family spats. And the reputational damage is often so high that no glossy investor presentation can scrub the business’s image clean. Who wants to invest in a firm whose leadership is embroiled in a courtroom soap opera over who has the greater claim to the family crest?
Also Read: Shield minority shareholders from business family feuds
In public companies, where shareholders expect accountability and governance, such fights are particularly galling. Is it not the responsibility of promoters to safeguard the interests of all stakeholders, rather than airing familial grievances at the expense of the company’s future?
India’s business ecosystem is dominated by family-owned enterprises, which account for two-thirds of our listed companies and contribute significantly to the economy. Among the Nifty 500, over half the businesses are controlled by promoter families. This makes the resolution of family feuds particularly urgent, as disputes among promoters can have far-reaching consequences for operational stability, minority shareholder confidence and even market performance.
The legal system, on its part, doesn’t help matters. Courts weigh factors like prior usage, trademark registration and public perception to settle disputes over the use of brand names, but rarely is the shareholder’s perspective given its due.
Worse, when the family name is a common surname, as it often is in India, the very idea of exclusive ownership becomes absurd. How can socially common surnames like Sharma, Kapoor, Iyer, Reddy or Khaitan be deemed unique to a single family simply because they have been used as company names for decades?
Critics may argue that family businesses have every right to settle internal matters as they see fit. True, but listed companies are not family heirlooms. They are public trusts where the family is just one shareholder among many.
Also Read: Kirloskar feud is a textbook case of how not to do a family settlement
Why, then, should an entire company pay the price for what may simply be a case of a promoter’s bruised ego? It is not uncommon for many high-profile cases to sign up a battery of lawyers, not just to fight but also ensure that those lawyers don’t appear for the other side. If a family wishes to engage in a modern-day gladiatorial contest, let the cost of it be borne by them alone.
The quiet complicity of other powerful stakeholders—like board directors and institutional investors—cannot be overlooked. While family disputes grab headlines, these critical players often stand by as passive spectators, perhaps wary of upsetting the powerful promoter group. Yet, inaction is a form of endorsement.
Perhaps it’s time for regulators to step in. Just as companies are required to protect minority shareholder rights, could there not be a rule mandating that the costs of such disputes—legal fees, PR damage control and other expense—be borne by the individuals involved? Of course, critics of such a rule will argue that it’s hard to distinguish personal disputes from legitimate corporate disagreements. Yet, if corporate governance is about protecting all stakeholders, shouldn’t this extend to insulating companies from the volatility of familial strife?
A mandatory ‘promoter feud disclosure’ clause should require listed entities to publicly report disputes, including detailed disclosures on who has operational control, who takes management decisions, who bears the costs of legal disputes and whether any standstill issues exist as a result of any prior arrangements.
Corporate governance cannot afford to let family matters become company liabilities. In the end, just because families can quarrel over legacy, they should also be able to bear the cost of their disputes, without burdening other shareholders.
The author is a corporate advisor and independent director on boards.